The school district will establish and maintain a capital assets management system for reporting capitalized assets owned or under the jurisdiction of the school district in its financial reports in accordance with generally accepted accounting principles (GAAP) as required or modified by law; to improve the school district's oversight of capital assets by assigning and recording them to specific facilities and programs and to provide for proof of loss of capital assets for insurance purposes.
Capital assets, including tangible and intangible assets, are reported in the government-wide financial statements (i.e. governmental activities and business type activities) and the proprietary fund financial statements. Capital assets reported include school district buildings and sites, construction in progress, improvements other than buildings and sites, land and machinery and equipment. Capital assets reported in the financial reports will include individual capital assets with an historical cost equal to or greater than $5,000. The Federal regulations governing school lunch programs require capital assets attributable to the school lunch program with a historical cost of equal to or greater than $500 be capitalized. Additionally, capital assets are depreciated over the useful life of each capital asset.
All intangible assets with a purchase price equal to or greater than $5,000 with useful life of two or more years, are included in the intangible asset inventory for capitalization purposes. Such assets are recorded at actual historical cost and amortized over the designated useful lifetime applying a straight-line method of depreciation. If there are no legal, contractual, regulatory, technological or other factors that limit the useful life of the asset, then the intangible asset needs to be considered to have an indefinite useful life and no amortization should be recorded.
This policy applies to all intangible assets. If an intangible asset that meets the threshold criteria is fully amortized, the asset must be reported at the historical cost and the applicable accumulated amortization must also be reported. It is not appropriate to “net” the capital asset and amortization to avoid reporting. For internally generated intangible assets, outlays incurred by the government's personnel, or by a third-party contractor on behalf of the government, and for development of internally generated intangible assets should be capitalized.
The capital assets management system must be updated monthly to account for the addition/acquisition, disposal, relocation/transfer of capital assets. It is the responsibility of the superintendent to count and reconcile the capital assets with capital assets management system on June 30 each year.
It is the responsibility of the superintendent to develop administrative regulations implementing this policy. It will also be the responsibility of the superintendent to educate employees about this policy and its supporting administrative regulations.
NOTE: In determining the capitalization threshold, the size of the school district, the property insurance deductible and the time and effort necessary to account for and track fixed
assets with a lesser value should be considered. It is suggested the board consider a capitalization threshold within the range of $200 to $5000. It is strongly recommended the board
consult with the school auditor prior to setting the capitalization threshold. Once the capitalization threshold is set, it is recommended the same capitalization threshold be used when
accounting for fixed assets in the general fixed assets account group and in the proprietary and fiduciary funds. The federal regulations governing school lunch programs already
require fixed assets attributable to the school lunch program with a historical cost of equal to or greater than $5000 be capitalized.
A school district could, and many do, use bar code identification tags to control fixed assets, such as VCRs, computer mice, etc., even though these fixed assets have a cost below the
capitalization threshold. In tracking these fixed assets, only the information necessary to control the location and use of them needs to be maintained. Some school districts videotape
each classroom/office annually to save time and effort tracking fixed assets below the capitalization threshold. The video tape is also helpful for insurance claims. Whether a school
district chooses to track fixed assets with a cost below the capitalization threshold or not, fixed assets with a cost below the capitalization threshold should not be included in the fixed
assets listing for reporting purposes.
This policy provides for valuing fixed assets at historical cost as required by GAAP. This policy bases the capitalization threshold on the historical/acquisition cost of the individual
asset. The school district can choose to use the historical cost of all the items included in a purchase order as the basis for determining whether to capitalize the fixed asset. The cost
of improvements may be added to the historical cost of a fixed asset. Deciding whether to add the costs of an improvement to a fixed asset's historical cost is a judgment call which
should be made after consulting with the school auditor.
It is important to note the distinctions made by GAAP between the general fixed assets account group and the proprietary funds. GAAP requires interest paid to place a fixed asset in
service be accounted for in proprietary funds be included in the historical cost. GAAP also requires infrastructure be included in the fixed assets of proprietary funds. Depreciation
records are only required for fixed assets accounted for in proprietary funds.
For school districts maintaining cash basis accounting for proprietary funds, monthly updates to the fixed assets management system should not be posted to the financial records
prior to the end of the year. It is recommended a separate computer file be maintained to note monthly updates to the fixed assets management system for fixed assets attributable to
proprietary funds. Monthly updates to the GFAAG will not affect the financial reporting of the non-proprietary funds.
Legal Reference: Iowa Code §§ 257.31(4); 279.8; 297.22-.25; 298A (2007).
Cross Reference: 709 Insurance Program
701.3 Financial Records
Approved 3-18-13
Reviewed 05-16-2022
Revised 06-20-2022
