Effective Date: April 1, 2016

Applicable FAM Policies: 510 - Tangible Capital Assets

Applicability: GNWT Departments and Public Asset

INTERPRETATION

The policy applies to all tangible capital assets whether acquired by(directly or through a capital leasing arrangement), constructed by or gifted to a Department or Public Agency.

All tangible capital assets must be accounted for as such:

• when construction or acquisition costs are known or a reasonable estimate can be made
• when fair market value is known or can be estimated (when a tangible capital asset is gifted),
• when future economic benefits associated with the asset are likely to be received; and
• when the value of an asset exceeds the threshold of $50,000 ( or a lower amount as approved by the Assistant Comptroller General or delegate).

All Tangible Capital Assets (TCA) that can be segregated into significant components that will be replaced or refurbished over time, meet the guidance for TCA components established by the Comptroller General, and having a value that exceeds the entity’s capitalization threshold, must record those components out separately, while continuing to link the components to the parent asset.

Recording

Departments and Public Agencies are responsible for ensuring that all relevant costs are captured in the valuation of TCAs and that they are entered in a timely fashion to ensure the integrity of the financial information available at any point in time. TCAs listings under their care are reviewed annually to ensure that TCAs are correctly recorded and amortized as expected. All TCAs are to be physically verified every 5 years with results being presented to the Comptroller General.

A prepaid tangible capital advance expense must be recorded when the Government provides the acquisition funding to a public agency or third party established under Government legislation (e.g. a school board, health board, municipality, etc.) and the Government retains title. (The preceding portion is only valid when funding has been provided to third parties but has not been expended. Once the money is expended, the cost of the asset must be transferred from a prepaid capital advance and into Work-in-Progress or the appropriate TCA account.)

Departments acquiring an asset and title from a third party (e.g. Federal Government) must capitalize the fair value of the asset at the date of acquisition and record an offsetting capital contribution.

Where market value is not available for an asset it should be recorded at an initial value equal to its residual value, where the residual value is material and estimable, or of nominal value after consultation with the Office of the Comptroller General.

TCA Categories

Airstrips and Aprons – includes formation works, airport structure, drainage works, culverts, lighting, paving, fencing and required infrastructure related to the airstrip and apron. Associated airport buildings and mobile equipment are not included in this category.

Aircraft – includes all fixed and rotary wing aircraft (e.g. waterbombers). Assets in this category should be componentized where appropriate. For example, airframes, engines, and avionics may be separate components depending on the useful life and wear characteristics of each.

Buildings – includes all buildings such as office and airport buildings, housing, complexes, warehouses, correctional facilities, campsite buildings, etc.

Fuel Distribution Systems – includes all fuel handling equipment such as fuel tanks, piping, pumps, dispensers, loading racks, etc. Note that these assets must be recorded individually when the $50,000 threshold is met, and not aggregated as a single “Tank Farm” asset.

Heavy Equipment – includes all mobile equipment and typical equipment such as large trucks, trailers, buses, graders, and pick-up trucks with a G.V.W. over 1- tonne , etc.

Information Technology System (ITS) Investments– includes computer hardware and software that is purchased, developed and/or configured.

Land – includes land, which is purchased, developed or acquired for value, for parks and recreation and building sites.

• Typical costs would include all costs intended to bring the land into its intended use whether or not they can be linked directly to a building on the site such as:
  • Site surveying;
  • Architectural and engineering fees;
  • Clearing and grubbing;
  • Sculpting the land;
  • Removing or planting trees; and,
  • Seeding grass, etc.
• Expenditures on land improvements where land is being returned to its natural state are not capitalized.  These costs are to be expensed in the period incurred since there is no future economic benefit to be derived.  Estimated costs “to bring a [contaminated] site up to the current minimum standard for its use prior to contamination” are to be expensed (PSAB, PS3260.42). Examples of this would be contaminated land clean-up projects, mining reclamation projects; etc. which return the land to its natural condition. Another example would be the activities required to develop and prepare timber sites including forest health surveys, planting, brushing, etc. Land developed and held for resale must not be capitalized.

Leasehold Improvements – are improvements performed in a building over and above the provision of basic space requirements. Leasehold improvements carry an amortization period of the current building lease plus the renewal option period or less if it can be substantiated by historical precedence.

Medical Equipment – includes major hospital equipment, lab equipment, etc.

Motor Vehicles – includes all other mobile equipment such as cars, vans, and light trucks up to  1-tonne  G.V.W., etc.

Other Equipment - includes miscellaneous equipment used in operations such as radar and satellite equipment.

Park Improvements – includes vacant land developed for recreational, environmental preservation, and economic pursuits. Examples of individual components would include campsites and associated access roads. Note that when assessing the threshold value for capitalization, the total cost of building the camp sites would be utilized, not the individual cost of each camping stall.

Roads and Bridges – includes formation works, road structure, drainage works, bridges, culverts, tunnels, underpasses and overpasses, river protection works and surfacing costs including paving, traffic facilities, fencing, lighting, etc. associated with the infrastructure. Geographical descriptions should be maintained for the various major components

Watercrafts – all freshwater ferries, tug boats, barges including ferry landings and dry docks.

Water/sewer Works – includes the formation works, reservoirs, pumping facilities, tanks and associated infrastructure.

Note: For greater certainty, betterments and replacements have the same classification as the asset to which it relates