| | | | | | | |  |  | 5919 MAIN STREET . NEW PORT RICHEY, FL 34652 . 727.853.1016 |
| TO: | City of New Port Richey City Council | | FROM: | Crystal S. Feast, Finance Director | | DATE: | 1/19/2021 | | RE: | Increase in Capitalization Threshold of Assets |
REQUEST:
The City Council is being asked to review and approve the request to increase the City's capitalization threshold of capital assets, from $1,500 to $5,000, as now required by the Department of Financial Services, Rule 69I-73.
DISCUSSION:
Effective October 1, 2020, Florida Administrative Code, Chapter 69I-73, now requires that “all property with a value or cost of $5,000 or more and a projected useful life of 1 year or more be recorded in the local government’s financial system as property for inventory purposes.” Property includes equipment, fixtures, and other tangible personal property.
The City’s current policy on capitalizing property (capital assets) is $1,500 and a projected useful life of 1 year or more.
Capitalization is, of its nature, primarily a financial reporting matter and simply establishes a threshold for depreciating assets. Assets purchased during a fiscal year that is less than $5,000 will be presented as an operating expenditure on the financial statements. Property that cost $5,000 or more will be depreciated, based on its useful life, and presented as an asset.
This change in capitalization threshold does not change the City’s purchasing and procurement policies.
RECOMMENDATION:
It is recommended that the City Council approve the request to increase the City’s capitalization threshold of capital assets, from $1,500 to $5,000, as now required by the Department of Financial Services, Rule 69I-73. The change will be retroactively applied as of October 1, 2020
BUDGET/FISCAL IMPACT:
Budget Impact - Purchases originally budgeted for as capital items will be transferred to operating, if the purchase amount is between $1,500 - $4,999.
Fiscal Impact - Assets purchased during the fiscal year that is less than $5,000 will be presented as an operating expenditure on the financial statements. Property that cost $5,000 or more will be depreciated, based on its useful life, and presented as an asset. | | | |
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