Page 527 - FortWorthFY23AdoptedBudget

• Intangibles (SBITAs)
VIII. Capitalization
Capitalization Thresholds
• Land must be capitalized regardless of the value or cost.
• Buildings must be capitalized regardless of the cost.
• Infrastructure must be capitalized when the useful life is 3 years or greater and the
cost is $100,000 or more for the life of the lease.
• Machinery and Equipment qualifying as a capital asset is defined as a single item
with an acquisition cost of $25,000 or more and has a useful life of 2 years or
greater. This includes items designed for off road for the life of the lease.
• Vehicles must be capitalized when the useful life is 4 years or greater, the cost is
$5,000 or greater for the life of the lease and it meets both of the following criteria:
 Self-propelled
 Primary use is on public streets and the unit is street legal
• Furniture, fixtures, and equipment (FF&E) will not be capitalized no matter the
amount.
• Bulk machinery and equipment per lease contract will be capitalized if the total
amount is over $500,000 for the life of the lease.
• Intangible assets - SBITAs must be capitalized when the useful life is 3 years or
greater and the cost is $100,000 or more for the life of the agreement.
IX. Amortization
A leased asset will be amortized in a systematic and rational manner over the shorter of the
lease term or the useful life of the underlying asset. The amortization of the leased asset
will be reported as an inflow or outflow of resources (for example, amortization expense),
which may be combined with depreciation expense related to other capital assets for
financial reporting purposes.

X. Initial Measurement
Lease Liability
For all leases meeting the GASB standards the lessee will record a lease liability. The lease
liability will be measured at the present value of future lease payments expected to be made
during the lease term and include the following:

• Fixed payments – Payments established at specific amounts in the lease contract
for which the lessee is obligated to make
• Variable payments that depend on an index or rate—such as the Consumer Price
Index (CPI) or a market interest rate—initially measured using the index or rate as
of the lease term’s commencement and assumed to stay in effect throughout the
lease term
• Variable payments that are fixed in substance
• Amounts that are reasonably certain of being required to be paid by the lessee under
residual value guarantees (RVG)
• The exercise price of a purchase option if it is reasonably certain that the lessee
will exercise that option

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