Page 412 - Fort Worth City Budget 2019

Capital Assets Policy

An improvement that meets the capitalization threshold in section VIII should be
capitalized.

C. Repair and Maintenance

Maintenance and repairs can be distinguished from betterments and improvements in
that maintenance and repairs are not intended to alter or change the asset or to increase
the useful life of the asset, but rather to sustain the asset in its present condition.
A cost will qualify as maintenance if any of the following are true:

 Recurs on an ongoing basis (scheduled maintenance) and keeps the asset
in a useable condition
 Does not add substantially to the value of the asset (i.e., it does not meet
the requirements in section VIII to be capitalized).
 Simply restores a capital asset to its former condition, addressing normal
wear and tear associated with the use of an asset
 Facilitates asset utilization for its original useful life

Examples include:

 Painting and similar activities
 Engine overhaul in a vehicle
 Resurfacing a roof with similar materials
 Remodeling and rearrangement costs

Expenditures attributable to repair and maintenance after the asset has been placed in
service will not be capitalized and will instead be charged to maintenance expense.

X. Depreciation

Depreciation is defined as a reduction in the value of an asset with the passage of time,
due in particular to wear and tear. Depreciation will be calculated and recorded monthly
for the City’s depreciable assets in accordance with GAAP. FMS is responsible to record
depreciation on a monthly basis.

The City uses the straight-line method of depreciation and a full month of depreciation is
taken in the original month of acquisition or capitalization. To calculate depreciation

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