FIXED ASSET ACCOUNTING AND MANAGEMENT PROCEDURES MANUAL

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FIXED ASSET ACCOUNTING ANDMANAGEMENT PROCEDURES MANUALTable of ContentsSection 1 Organizational Responsibilities . 11234567891011Purpose . 1Objectives. 1Scope . 1Responsibilities . 1Acquisitions . 2Transfers. 3Retirements and Disposals . 4Asset Inventory . 4Annual Financial Reporting . 4Records Maintenance . 4Definitions. 5Section 2 Asset Valuation . 7123456789101112131415Purpose . 7Scope . 7Guidelines . 7Valuation Terms . 10Valuation of Land . 11Valuation of Buildings . 14Valuation of Improvements Other than Buildings . 16Valuation of Machinery and Equipment (Including Vehicles) . 17Valuation of Construction Projects in Progress . 18Self-Constructed Assets . 19Multiple-Unit Acquisitions . 19Make-Ready Costs . 20Multiple Funding Sources . 21Recording Valuation Information in the FAMS . 22Controlled Items . 23REVISEDDecember 2005i

FIXED ASSET ACCOUNTING ANDMANAGEMENT PROCEDURES MANUALTable of ContentsSection 3 Multiple Unit Assets . 25123456Purpose . 25Scope . 25Guidelines . 26Recording an Asset System. 27Recording a Group Asset . 29Recording a Component Asset . 30Section 4 Fixed Asset Classification and Useful Lives . 35123456Purpose . 35Scope . 35Guidelines . 35General Procedure . 36Standard Asset Descriptions . 37Asset Class and Useful Life Table . 38Section 5 Numbering and Tagging Fixed Assets . 43123456789101112Purpose . 43Scope . 43Guidelines . 43Tagging Methods and Placement . 44Fixed Asset Identification (FAI)/Tag Numbering Systems . 44Tag Supplies and Inventory . 45Cross References in the Fixed Asset Management System (FAMS). 45Location Assignment Tags. 47Responsibilities for Assignment of Numbers and Tagging . 47Procedures for Assigning Numbers and Tagging . 49Replacing Numbers for Lost or Damaged Tags. 51Sample Approaches. 52REVISEDDecember 2005ii

FIXED ASSET ACCOUNTING ANDMANAGEMENT PROCEDURES MANUALTable of ContentsSection 6 Depreciation . 551234567Purpose . 55Scope . 55Guidelines . 55Assigning Useful Life and Salvage Value . 56Methodology and Calculation . 58Period Processing . 59Depreciation Adjustment Procedure . 60Section 7 Asset Acquisitions . 6312345678910111213Purpose . 63Scope . 63Guidelines . 63Responsibilities by Major Asset Category . 65Responsibilities by Organization or Position Assignment . 66Asset Acquisition by Purchase Order (PO) Procedure . 68Procedure for Recording Related Accounting Transactions . 70Verification Procedure for Assets Tagged and Recorded in the FAMS . 71Capitalization of Rolling Stock Procedure. 71Capitalization Procedure for Machinery and Equipment Purchased by Contract . 72Procedure for Recording Multiple Fixed Assets Acquired by a Single Purchase . 73Capital Leases . 74Grant Funded Assets . 75Section 8 Asset Acquisition by Donation, Confiscation, Condemnation, EminentDomain, Annexation, or Foreclosure . 7912345678910Purpose . 79Scope . 79Guidelines . 79General Procedure . 80Donated Assets . 82Confiscated Assets . 83Eminent Domain . 83Annexation . 85Foreclosure . 85Assets in the Temporary Custody of the City . 87REVISEDDecember 2005iii

FIXED ASSET ACCOUNTING ANDMANAGEMENT PROCEDURES MANUALTable of ContentsSection 9 Constructed Assets . 8912345678Purpose . 89Scope . 89Guidelines . 89Responsibilities . 91Procedure for Accumulating and Tracking Construction Costs . 92Procedure for Placing Constructed Assets in Service . 93Final Close-Out Processing Procedure . 95Capitalization of Interest . 97Section 10 Improvements, Betterments, and Maintenance . 991234567Purpose . 99Scope . 99Guidelines . 99Background for Understanding . 101Determining Whether to Capitalize or to Charge an Expense to Maintenance . 103Procedure for Recording Improvements and Betterments in the Fixed AssetManagement System (FAMS) . 104Retirements Related to Replacements and Renovations . 106Section 11 Transfer of Fixed Assets . 107123456789Purpose . 107Scope . 107Guidelines . 107Types of Transfers . 109Departmental Transfers . 110Interdepartmental/Interfund Transfers . 112Interdepartmental/Intrafund Transfers . 114Transfers of Assets via the Property Disposal Management Office (PDMO) . 115Transfers of Federal or Grant Funded Assets . 115REVISEDDecember 2005iv

FIXED ASSET ACCOUNTING ANDMANAGEMENT PROCEDURES MANUALTable of ContentsSection 12 Transfer and Removal of Surplus Property . 117123456Purpose . 117Scope . 117Responsibilities . 117Forms . 118Procedure . 118Property Redistribution . 119Section 13 Retirement and Disposal . 121123456789101112131415Purpose . 121Scope . 121Responsibilities by Major Asset Category . 121Disposal Criteria . 123Disposal Methods . 123General Disposal Procedure . 125Disposal by Transfer to the PDMO. 125Disposal by Sale . 127Disposal by Trade-In . 131Disposal by Return to Supplier for Credit . 131Disposal of Stolen Assets . 132Disposal of Missing Assets . 133Disposal of Damaged, Destroyed, or Cannibalized Assets (Including Scrap). 134Abandonment of Fixed Assets . 134Disposition of Federal and Grant Funded Assets. 135Section 14 Physical Inventory . 137123456789Purpose . 137Scope . 137Responsibilities . 137Inventory Frequency . 138Conducting the Physical Inventory . 138Reconciliation Results and Actions . 139Reporting Final Results . 141Damaged or Defaced Tags . 141Grant Funded Assets . 141REVISEDDecember 2005v

FIXED ASSET ACCOUNTING ANDMANAGEMENT PROCEDURES MANUALTable of ContentsSection 15 Periodic and Year-End Procedures and Records Maintenance . 143123456Purpose . 143Scope . 143Periodic Procedures. 143Financial Statements . 144Disclosure Requirements for Leases . 145Records Retention .

accordance with asset management guidelines and procedures established by the Director of Finance & Administration or a designee. 8 Asset Inventory Departments will conduct a full inventory of all property under their stewardship, in accordance with the inventory schedule developed by F&A, and will provide the results of that inventory to the Director of Finance & Administration or a designee .

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