Page 407 - Fort Worth City Budget 2019

Capital Assets Policy

VII. Asset Classification

The City categorizes capital assets into the following:

A. Land

Land includes all land parcels purchased or otherwise acquired by the City for any
purpose, including but not limited to building sites, streets, right of way, recreation,
future use, etc. This does not include land held for resale, which is accounted for as
inventory.

Land is frequently associated with some other asset (e.g., land under a building or
road). Land should always be treated and accounted for separately. The cost of the land
should include not only the acquisition price, but also the cost of initially preparing
land for its intended purpose, provided these preparations have an indefinite useful life,
like the land itself. The recorded cost of land includes (1) the contract purchase
price; (2) the costs of closing the transaction and obtaining title, including
commissions, options, legal fees, title search, insurance, and past due or current taxes;
(3) the costs of surveys; and (4) the cost of preparing the land for its particular use
such as clearing and grading. If the land is purchased for the purpose of constructing a
building, all costs incurred up to the excavation for the new building should be
considered land costs. Removal of an old building, clearing, grading and filling are
considered land costs because they are necessary to get the land in condition for its
intended purpose. Any proceeds obtained in the process of getting the land ready for
its intended use, such as salvage receipts on the demolition of the old building or the
sale of cleared timber, are treated as reductions in the price of the land. Capitalization
of land costs may include, but are not limited to, the following:
 Original contract price
 Brokers’ commissions
 Legal fees for examining and recording title
 Appraisal fees
 Cost of title guarantee insurance policies
 Cost of real estate surveys
 Cost of excavation, grading or filling of land and razing of an old building
 Payment of noncurrent taxes accrued on the land at date of purchase, if
payable by purchaser

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