Individual Capital Asset Records and the Capital Asset Accounting System

Municipalities should maintain their capital asset accounting system (CAAS) electronically. Some accounting software systems contain a capital asset module for this purpose. If your municipality's software does not have this capability, the required information can be maintained in a spreadsheet.

The CAAS is the capital asset subsidiary ledger. The total of the amounts shown in the subsidiary ledger corresponds to the control totals for the capital assets.

The following information should be documented for each individual asset:

• Asset number, including the class code;
• Sequence or payment voucher number;
• Date of acquisition;
• Name and address of vendor;
• Abbreviated description;
• Department, division and unit charged with custody;
• Location;
• Cost;
• Fund and department from which purchased;
• Method of acquisition;
• Estimated life;
• Date, method, and authorization for disposition; and
• Depreciation method and annual depreciation expense.

Once information has been entered on the asset ledger card, the next step is to develop a filing system to provide controls. Group the cards first by department. In the case of equipment, this usually amounts to grouping by location. Within each department or location, arrange the cards according to the classification of capital asset (i.e., land, building, infrastructure). Further subdivisions may be advisable if justified by the number of cards. For example, equipment could be divided into automotive, construction, office, etc.

An individual asset number should be assigned and attached to each asset. Assigning each item a permanent number provides the necessary link between the asset and the CAAS.

There are a number of adequate numbering systems for recording capital assets. A simple, flexible system might be a numerical sequence code system, with an alpha prefix. The alpha prefix classifies the asset according to the seven classes recommended for accounting and statement presentation purposes (L: land, B: building, I: infrastructure, O: improvements other than building, E: equipment, N: intangibles and C: construction in progress). This code numbering system might also identify the department and asset number.