Page 426 - FortWorthFY23AdoptedBudget

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

• Cost of title guarantee insurance policies

• 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

*Excluded costs may include payroll charges, advertising, process
services, appraisal fees, and surveys, as they typically are not able to be
accurately and timely associated with the land purchase at closing.

Improvements other than buildings (land improvements) are used for
permanent (i.e., non-moveable) improvements, other than buildings, that
add value to the land, but do not have an indefinite useful life. Examples
include, fences, retaining walls and parking lots.

B. Buildings

All permanent structures are included in the classification of buildings.
The costs of an improvement (or betterment) are normally added to the
cost of the related structure, rather than being treated as a separate asset.
The same is true of restoration costs following a capital asset impairment.
Capitalization of costs related to buildings include, but are not limited to,
the following:

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