Page 432 - FortWorthFY23AdoptedBudget

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 expense using the straight-line method:
Annual Depreciation = Cost – Salvage Value
Asset Useful life (in years)
Salvage value is an estimate of the amount that will be realized at the end of useful
life of a depreciable asset. The City may assume that salvage value will be
insignificant and therefore, will not use it in the depreciation calculation.

Asset must be depreciated according to the useful life guidelines established by
the City. These guidelines are summarized below:

• Buildings: 20 - 50 years

• Infrastructure: 20 - 60 years

• Machinery and Equipment: 2 - 20 years

• Vehicles; 4 –15 years

• Runways and Taxiways: 20 - 30 years

• Water and Sewer Equipment: 5 - 30 years

• Water and Sewer Infrastructure: 25 - 60 years

The following capital assets are not depreciated:

• Land

• Intangible assets with indefinite useful lives

• Construction Work in Progress

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