What are general capital assets How are they reported?
Chapter 405 of the Laws of 1981 required the State to develop a comprehensive Capital Asset reporting system that monitors and reports upon the State’s capital assets. Show GASB Statement No. 34 – Basic Financial Statements—and Management's Discussion and Analysis—for State and Local Governments (GASB Codification Section 1400 – Reporting Capital Assets) Process and Document Preparation: The State developed a comprehensive Capital Assets reporting system in compliance with Chapter 405, Laws of 1981 that monitors and reports upon the State’s capital assets. The Statewide Capital Asset Accounting System (the system), maintained by the Office of General Services (OGS), was significantly improved and updated in 1998. In October 2015, the balances in the system were converted to the new Statewide Financial System’s Asset Lifecycle Module (ALM) and the system was retired. The ALM continues to be maintained by OGS. This section describes policies that are applied to the extent practical in our ACFR presentation for the recording of capital assets. The implementation of GASBS 34 necessitated significant changes to the area of capital asset reporting including: the presentation of all capital assets on the face of the State’s government-wide financial statements; the inclusion of depreciation expense and accumulated depreciation or the use of the alternative modified approach; and the inclusion of all infrastructure assets (roads, bridges, sewer systems, water systems, etc.) These additional reporting elements and new requirements are described in detail in the following sections. The major issues related to accounting for capital assets include the following:
NECESSITY FOR GENERAL CAPITAL ASSETS REPORTING All capital assets, including infrastructure meeting defined levels of materiality, are included in the State’s government-wide financial statements as required by GASBS 34. These assets are reported in a very similar manner to capital assets in a commercial accounting environment and are also subject to depreciation and/or the modified approach as a method to reflect asset condition. The purpose of recording capital assets in the Statement of Net Position is to record the value of these assets (net of depreciation) as general assets of the State. Capital assets will be depreciated over defined useful lives as indicated below. CRITERIA FOR RECORDING GENERAL CAPITAL ASSETS INCLUDING INFRASTRUCTURE General capital assets, consisting of tangible and intangible asset, should be capitalized when all of the following criteria are met:
For major construction projects, the $100,000 capitalization limit should apply to the total capital expenditures rather than the individual assets. For bulk purchases of furniture, equipment, etc., the individual assets must exceed $40,000 to be capitalized. Intangible Assets
RECORDING GENERAL CAPITAL ASSETS General capital assets should be classified in the appropriate account code to indicate the type of fixed asset owned and the source of the monies from which the general capital assets were acquired. The general capital assets should be classified by type within the following major classifications and depreciated over the indicated estimated useful lives:
Capital Projects Fund revenues are accrued from the following sources:
Improvements and renovations will be recorded within the capital asset system as a capital asset addition if they meet the following criteria:
The original component being renovated will be retired if the actual cost of the renovation is 75% or more of the current replacement cost of the component being renovated. Renovations are projects performed on already existing components while improvements are the addition of a new component where one did not previously exist.
Software is capitalized when the costs exceed $1 million VALUATION OF CAPITAL ASSETS General capital assets should be accounted for at historical cost (at estimated historical cost if actual historical cost is not practicably determinable). Cost is defined as consideration given or received whichever is more objectively determinable. It includes the purchase price or construction costs and also additional charges to place a fixed asset in its intended location and condition for use, i.e., freight and transportation charges, site preparation expenditures, professional fees, and legal claims directly attributable to asset acquisition. In the case of land, ancillary costs should also be included, such as legal and title fees, damage payments, site preparation costs (clearing, filling, and leveling), and the demolition of unwanted structures. In addition, costs of buildings and improvements other than the costs of construction should include professional fees of architects, attorneys, appraisers, etc., and related costs incurred during the period of construction. Capitalizable costs include, but are not limited to, the following:
Donated capital assets should be recorded at their estimated fair value at the time of acquisition. General capital assets acquired by tax foreclosure which are to be retained by the government for its own use should be capitalized in the General Capital Assets Account at their fair value on the date foreclosed, but not in excess of the tax liens satisfied by such foreclosure. MAINTENANCE OF CAPITAL ASSET RECORDS Once the value of the general fixed asset has been determined, a consistent means of maintaining records should be applied. The following information shall be maintained:
Furniture and Fixtures, and Machinery and Equipment should be aggregated by agency with each agency responsible for individual details. DISPOSITION OF GENERAL CAPITAL ASSETS The disposition of capital assets should be recorded by reducing the appropriate asset and liability account(s) for the total cost of the asset and its associated depreciation or amortization. TREATMENT OF INFRASTRUCTURE ASSETS Infrastructure consists of roads, bridges, curbs and gutters, streets, sidewalks, drainage systems, lighting systems, historic monuments, and similar assets that are immovable and of value only to the State. Infrastructure assets are included net of appropriate depreciation in the government-wide financial statements. DEPRECIATION AND MODIFIED APPROACH FOR INFRASTRUCTURE CAPITAL ASSETS The reporting of depreciation is required for the government-wide financial statements. Capital assets except for Land, Land Preparation, Library Books, and Construction in Progress must be depreciated over the useful lives described above or the modified approach may be used for certain infrastructure assets that meet the criteria of:
SUNY AND CUNY SENIOR COLLEGES FUNDS AND PUBLIC BENEFIT CORPORATIONS Capital assets reported for SUNY and CUNY Senior Colleges Funds and public benefit corporations are obtained from the audited financial statements issued by the entities comprising these funds and are included in the government-wide financial statements of the State. Guide to Financial OperationsREV. 09/12/2022How are general capital assets recorded?General capital assets should be classified in the appropriate account code to indicate the type of fixed asset owned and the source of the monies from which the general capital assets were acquired.
Where are general capital assets reported?Capital assets are reported at their historical cost net of accumulated depreciation in financial statements using the economic resources measurement focus and the accrual basis of accounting.
Why are general capital assets not recorded in governmental funds?Why are general capital assets not recorded in governmental funds? Capital assets are non financial resources. They are excluded from governmental funds because the measurement focus of governmental funds is upon financial resources.
How are capital assets classified?Capital assets can be of two kinds- LTCA (Long-Term Capital Asset) and STCA (Short-Term Capital Asset). LTCA are assets that are held for a period longer than the prescribed holding period. STCA are assets held for a duration lesser than the prescribed holding period.
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