1. Statement of purpose
Capital assets purchases or constructed by the Schaumburg Township District Library (the "Library") represent a major investment by the taxpayers. The purpose of this policy is to set forth the accounting policy as to how capital assets are to be accounted for and reported.
2. Capital asset definition
Capital assets are major assets that benefit more than a single accounting period. They include such items as land, buildings, furnishings and equipment, and vehicles. Due to the nature of the Library's mission and the dollar amount it invests, books, publications, and audio visual materials are also considered capital assets of the Library.
3. Capital asset categories
The Library will use the following capital asset categories when accounting for capital assets:
c) Building improvements
d) Leasehold improvements
e) Furniture and equipment
g) Books and library materials
h) Artwork, and
i) Construction in progresss
4. Capitalization thresholds
The Library will capitalize all assets with an estimated useful life in excess of one year and an individual unit cost of $5,000 or more (with the exception of books and materials). All books, publications, and audio visual material purchased and owned by the Library with a useful life of more than one year will be capitalized without regard to purchase price.
With regard to asset repairs and improvements, costs incurred in the amount of $5,000 or more will be capitalized if the repair or improvement extends the useful life of the asset by more than 25% or significantly increased the service capacity or usefulness of the asset.
5. Estimated useful lives
"Estimated useful life" means the estimated number of years that an asset will be able to be used for the purpose for which it was intended when purchased. Estimated useful life is used to allocate the cost of the asset over the period of time in which the Library is expected to receive benefit from the asset. The periodic charge of the benefit is called depreciation expense, and is reported in the government-wide financial statements of the Library. The following table sets forth the useful life of each category of capital asset that is depreciated.
|Capital asset classification||Assumed useful life (in years)|
|Books and library materials||7|
|Audio visual materials||3|
6. Recording capital assets
Capital assets are to be reported and depreciated in the government-wide financial statements. All assets that meet the above definitions and thresholds will be recorded at historical costs or estimated historical cost. In the case of a donated asset, it shall be recorded at its estimated fair value at the time of acquisition. The following parameters further refine the recording of capital assets.
a) Land is recorded at historical cost and is not depreciated.
b) Artwork is recorded at historical costs and is not depreciated.
c) Expenditures classified as construction in progress will be recorded at historical cost, and will not begin to be depreciated until the construction is complete and the expenditure is reclassified to another capital asset classification.
The Business Office is to maintain an inventory of all capital assets.
Assets subject to depreciation will be depreciated using a straight-line method. Depreciation for assets acquired during the year will be prorated based on the month the asset is put into service.
8. Selling or disposing of capital assets
The Library will attempt to retain capital assets until the end of their expected useful life, or they become obsolete or unrepairable. There is a separate fiscal policy statement approved by the Library Board of Trustees covering the process of selling or disposing of Library capital assets.
9. Computer and office equipment inventory
This policy is intended to address those capital assets that must be tracked for external financial reporting purposes. There are other assets that do not need to be included in external financial statements, but do need to be inventoried and controlled for internal control purposes. Although most computer equipment and office equipment will fall below the dollar threshold for capitalization, Library staff is to maintain a separate inventory of all computer equipment and office equipment to improve internal control and safeguard these assets due to their relatively small size and the ease in which they could be lost or stolen.
Approved by the Schaumburg Township District Library Board of Trustees on September 18, 2017.