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6. Other assets <br />This asset class is used for assets that do not fit into one of the other major asset classes. <br />It also includes computer software that is either purchased or developed for internal use, <br />which should be capitalized if the cost of the software exceeds the capitalization threshold <br />and is depreciated over the software's estimated useful life. Capitalization of computer <br />software includes software license fees if the total dollar amount of the fee divided by the <br />number of units or terminals exceeds the threshold. <br />Examples of expenditures to be capitalized as computer software include: <br />• External direct costs of materials and services, i.e., third -party fees for services <br />• Costs to obtain software from third parties <br />• Travel costs incurred by employees in their duties directly associated with <br />development <br />• Payroll and payroll -related costs of employees directly associated with or devoting <br />time to encoding, installing, or testing <br />• Costs to develop or obtain software that allows for access or conversion of old data <br />by new information systems <br />Note that upgrades and enhancements should only be capitalized to the extent that they <br />increase the functionality of the product. <br />7. Construction in progress <br />This asset class is used for costs incurred to construct or develop an asset before it is <br />substantially ready to be placed into service (at which time it is reclassified into the <br />appropriate major asset class). <br />Section IV: Depreciating Capital Assets <br />Depreciation is the process of allocating the cost of a tangible asset to the periods of benefit. <br />Capital assets shall be depreciated over their estimated useful live with exception of the <br />following: <br />Inexhaustible assets, i.e., land, and land improvements that do not require maintenance <br />or replacement, e.g., certain works of art and historical treasures <br />Construction work -in -progress <br />For financial purposes, the City will use the straight-line method of depreciation, which <br />allocates the cost evenly over the life of the asset. Generally, at the end of an asset's life, the <br />sum of the amounts charged for depreciation in each accounting period, or accumulated <br />depreciation, will equal the original cost less salvage value. <br />0 <br />