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Capital Assets and Capitalization Thresholds <br /> A capital asset is real or personal property that has a value equal to or greater than the <br /> capitalization threshold for the particular classification of the asset and has an estimated <br /> useful life greater than one year. The Utilities reports capital assets in the following <br /> categories: <br /> • Land/land Improvements <br /> • Other improvements <br /> • Buildings/building Improvements <br /> • Machinery and Equipment <br /> • Vehicles <br /> • Infrastructure <br /> • Construction in Progress <br /> For financial statement purposes only, a capitalization threshold is established for each <br /> capital asset category as follows: <br /> Capital Asset Category Capitalization Threshold <br /> Land/land improvements $10,000 <br /> Other improvements $25,000 <br /> Buildings and building improvements $25,000 <br /> Machinery and Equipment $5,000 <br /> Vehicles $5,000 <br /> Infrastructure $100,000 <br /> Construction in progress Accumulate all costs and capitalize if over <br /> $100,000 when completed <br /> Other Assets $5,000 <br /> Another criterion for recording capital assets is capital-related debt. Capital assets <br /> purchased with debt proceeds should be capitalized and depreciated over their estimated <br /> useful life. Capitalizing these assets would minimize the potential of negative net assets <br /> being reported in the statement of net assets. In most cases it would be expected that <br /> these assets would normally meet the thresholds and guidelines for recording as a capital <br /> asset. <br /> 2 <br /> 62 <br />