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WS — Item 7 <br />WORK SESSION STAFF REPORT <br />Work Session Item No. 7 <br />Date: February 7, 2022 <br />To: City Council <br />From: Hannah Lynch, Finance Director <br />Re: Capital Asset Policy <br />Background <br />The City has previously followed an informal Capital Asset Policy. A Capital Asset <br />Policy does not affect the budgeting or purchasing of capital assets, it is strictly used for <br />financial reporting purposes. <br />The attached Capital Asset Policy provides guidance to meet financial reporting <br />requirements. When preparing for the annual audit, staff is guided by the policy in <br />regards to what is considered a capital asset, the cost that should be assigned to it, and the <br />useful life in which the asset is depreciated. <br />Previously, the City used a $2,500 capitalization threshold for all asset classes. The <br />Capital Asset Policy assigns a capitalization threshold to each asset class. This practice is <br />widely used by other local government units. <br />Requested Council Direction <br />Consider adoption of the Capital Asset Policy at the February 14, 2022 council meeting <br />with it being retroactively effective for fiscal year beginning January 1, 2021. <br />Attachments <br />Capital Asset Policy <br />