Alert
Additional Disclosures Required by the GASB
To provide financial statements users with essential information about capital assets, the Governmental Accounting Standards Board (GASB) issued Statement 104, Disclosure of Certain Capital Assets.
Statement 104 requires certain types of capital assets to be disclosed separately in the note disclosures about capital assets.
The amended guidance also establishes disclosure requirements for capital assets held for sale.
Who Is Affected by the Amended Guidance in Statement 104?
The requirements apply to the financial statements of all state and local governments.
What Changes with the Amended Guidance in Statement 104?
Statement 34, Basic Financial Statements—and Management’s Discussion and Analysis—for State and Local Governments, requires certain information regarding capital assets to be presented by major class.
Under the current disclosure requirements, intangible right-to-use assets can be classified as capital assets due to the inclusion of intangible assets in the definition of a capital asset.
The amendments in Statement 104 require certain types of capital assets to be disclosed separately in the capital assets note disclosures as required by Statement 34.
Capital Assets Requiring Separate Disclosure
Statement 104 requires the following types of capital assets and related amortization to be disclosed separately in the note disclosures about capital assets:
- Lease assets reported in accordance with Statement 87, Leases, by major class of underlying asset.
- Intangible right-to-use assets recognized by an operator in accordance with Statement 94, Public-Private and Public-Public Partnerships and Availability Payment Arrangements, by major class of underlying public-public partnership asset.
- Subscription assets reported in accordance with Statement 96, Subscription-Based Information Technology Arrangements.
- Intangible assets other than those listed above, by major class of asset and separate from tangible capital assets and right-to-use assets.
The amended guidance clarifies that owned assets and assets that represent the right to use the same type of underlying asset shouldn’t be reported in the same major class.
Capital Assets Held for Sale
Statement 104 defines the term capital assets held for sale and requires additional disclosures for capital assets held for sale.
Under the amended guidance, a capital asset is considered held for sale if both of the following conditions are met:
- The government has decided to pursue the sale of the capital asset, and
- It’s probable that the sale will be finalized within one year of the financial statement date.
Statement 104 provides the following factors to consider when evaluating if it’s probable that the sale will be finalized within one year of the financial statement date:
- Whether the asset is available for immediate sale in its present condition.
- Whether an active program to locate a buyer has been initiated, which may include the asset being put out for bid.
- Market conditions for selling that type of asset.
- Regulatory approvals needed to sell the asset.
Governments are required to evaluate whether a capital asset is considered held for sale each reporting period.
Disclosures and Presentation
Statement 104 also requires:
- Capital assets held for sale to be reported within the appropriate major class of capital asset.
- Governments to disclose the historical cost and accumulated depreciation or amortization of capital assets held for sale, by major class of asset.
- Governments to disclose the carrying amount of debt for which the capital assets held for sale are pledged as collateral for each major class of asset.
Effective Dates
The requirements are effective for fiscal years beginning after June 15, 2025, and all reporting periods thereafter.
Earlier application is encouraged.
Transition
The amended guidance should be applied retroactively to all periods presented in the basic financial statements. If application to prior periods presented isn’t practicable, the reason for not applying the amended guidance to prior periods presented should be disclosed.
We’re Here to Help
If you have questions about the amended guidance in Statement 104 and how it could impact accounting for your organization, contact your Moss Adams professional.