Page 411 - Fort Worth City Budget 2019

Capital Assets Policy

IX. Betterments, Improvements and Repair and Maintenance

A. Betterments

A betterment materially renovates or enhances a previously capitalized asset without
introduction of a completely new unit. Alterations that change the physical structure of
assets (e.g., cutting new entry and exit openings or closing old ones; erecting new
walls, windows and partitions or removing old ones) but neither materially add value
to the asset nor prolong its useful expected life should be charged to maintenance
expense. Examples of betterments include:

 Enhancement of an old shingle roof through the addition of modern,
fireproof tiles
 “Major catch-up” repair to or rehabilitation of an existing neglected asset
that extends the useful life or substantially increases the value of the asset.

A betterment that meets the capitalization threshold in section VIII should be
capitalized.

B. Improvements

Improvements include additions of new components to previously capitalized assets
that either increase the assets’ value, extend the useful life, increase the normal rate of
output, lower the operating cost, or increase the efficiency of the existing asset.
Replacements of components of existing capitalized assets with improved or superior
units, such that the value of the assets is increased, are also classified as
improvements.

Examples include:

 Installation of an air condition system where there previously was none
 Installation of a crane on a truck that did not previously have one
 Removal of a major part or component of equipment and the substitution of
a new part or component that increases either the value or useful life
 Addition of a new wing on a building

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