Comments on: Are You Recovering Your Water and Sewer Utility’s Capital Costs? http://www.stepwiseadvisors.com/are-you-recovering-your-water-and-sewer-utilitys-capital-costs financial guidance that makes a difference Fri, 27 Jan 2012 14:09:04 +0000 hourly 1 http://wordpress.org/?v=3.3.1 By: Jason Mumm http://www.stepwiseadvisors.com/are-you-recovering-your-water-and-sewer-utilitys-capital-costs/comment-page-1#comment-701 Jason Mumm Mon, 16 Jan 2012 22:14:50 +0000 http://www.stepwiseadvisors.com/?p=1016#comment-701 There are two separate issues here: depreciation of the asset, and contributed capital. The asset should be depreciated according to normal accounting convention. Contributed capital, such as grants and dedicated assets is recorded as "contributed capital" - a special account on the Equity side of the balance sheet. A good working definition for contributed capital: <em>any amount or item of money, services, or property received by a utility form any person or government agency any portion of which is provided at no cost to the utility.</em> Remember too: even though items may be contributed to a utility, that only diminishes the capital required to acquire the asset. The utility is still going to have to manage that asset's life including renewal and replacement and, ultimately, replacement. There are two separate issues here: depreciation of the asset, and contributed capital. The asset should be depreciated according to normal accounting convention. Contributed capital, such as grants and dedicated assets is recorded as “contributed capital” – a special account on the Equity side of the balance sheet. A good working definition for contributed capital: any amount or item of money, services, or property received by a utility form any person or government agency any portion of which is provided at no cost to the utility.

Remember too: even though items may be contributed to a utility, that only diminishes the capital required to acquire the asset. The utility is still going to have to manage that asset’s life including renewal and replacement and, ultimately, replacement.

]]> By: Jess R. Shell http://www.stepwiseadvisors.com/are-you-recovering-your-water-and-sewer-utilitys-capital-costs/comment-page-1#comment-694 Jess R. Shell Mon, 09 Jan 2012 23:37:06 +0000 http://www.stepwiseadvisors.com/?p=1016#comment-694 Is it wise to depreciate an asset obtained without a utility's expenditure, such as federal grants or water lines dedicated by a developer? Is it wise to depreciate an asset obtained without a utility’s expenditure, such as federal grants or water lines dedicated by a developer?

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