village of wellington, florida

NOTE 1.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)Capital Assets and Depreciation (Continued)wide statement of net assets. General capital assets are carried at historical cost. Where cost can not betestingdetermined from the available records, estimated historical cost has been used to record the estimated valueof the assets. Assets acquired by gift or bequest are recorded at their fair value at the date of donation. Theroad network was valued based on current construction costs discounted by consumer price indices forhighway construction.Capital assets of the enterprise funds are capitalized in the fund in which they are utilized. The valuationbasis for enterprise fund capital assets are the same as those used for general capital assets. Additionally, netinterest cost is capitalized on enterprise fund projects during the construction period in accordance withFinancial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) 835, Interest.Additions, improvements, and other capital outlay that significantly extend the useful life of an asset arecapitalized. Other costs incurred for repairs and maintenance are expensed as incurred.Depreciation has been provided over the estimated useful lives using the straight-line method ofdepreciation. The estimated lives for each major class of depreciable capital assets are as follows:Distribution linesBuildings and utility plantsTelemetry and wellsMajor equipmentLand improvementsMetersFurniture, fixtures, equipment and vehiclesComputers40 years30 years20 years15 years10 years10 years5 years3 yearsThe street network is not depreciated. The Village has elected to use the modified approach in accountingfor its streets. The modified approach allows governments to report as expenses in lieu of depreciation,infrastructure expenditures which maintain the asset but do not add to or improve the asset. Additions andimprovements to the street network are capitalized. The Village uses an asset management system to ratestreet condition and quantify the results of maintenance efforts.Compensated AbsencesThe Village’s employees are granted compensated absence pay for annual leave in varying amounts based onlength of service. Annual leave is accrued as a liability when benefits are earned by the employees, that is,the employees have rendered services that give rise to the liability and it is probable that the Village willcompensate the employees in some manner, e.g., in cash or in paid time-off, now or upon termination orretirement. Benefits for employees include major illness leave. This benefit accrues at 4 hours per monthper employee. Employees may utilize this benefit for an illness lasting more than one day. Upon separationof service, and with 10 years of continuous service, any balance of these hours are valued at the currenthourly pay rate, and are paid into the Retirement Health Savings Plan sponsored by ICMA. In this plan,monies are used by individuals to pay for qualified medical expenses, including premiums. For individualsthat leave prior to 10 years of service, this time is forfeited. Compensated absences are accrued whenincurred in the government-wide and proprietary fund financial statements. A liability for these amounts isreported in the governmental funds only if they have matured. For the governmental funds, compensatedabsences are liquidated by the fund in which employees are compensated. Those funds are the General;Planning, Zoning and Building; Recreation Programs; Surface Water Management; and, Gas TaxMaintenance.34