GASB proposes rules for disclosing and classifying gov’t capital assets

The Governmental Accounting Standards Board floated a proposal Thursday to set requirements for some types of capital assets to be disclosed separately by state and local governments for purposes of note disclosures.

The exposure draft, “Disclosure and Classification of Certain Capital Assets,” also sets requirements for certain capital assets to be classified as “held for sale.”

Some of GASB’s pronouncements, like Statement Nos. 87, “Leases,” and 96, “Subscription-Based Information Technology Arrangements,” created certain types of capital assets that are described as “right-to-use” assets. Given the recognition of those new types of assets, the board decided to consider the effectiveness of existing classifications.

After hearing feedback from financial statement users during the research phase of the project, GASB is proposing that some types of assets be disclosed separately in the note disclosures about capital assets to enable users to make better decisions about the assets and to evaluate accountability.

The exposure draft deals with four types of capital assets that would be disclosed separately in the notes:

• Capital assets held for sale, by major class of asset;
• Lease assets reported under Statement 87, by major class of underlying asset;
• Subscription assets reported under Statement 96; and,
• Intangible assets other than leases assets and subscription assets, by major class of assets.

Capital assets held for sale would be a new classification proposed in the exposure draft. Under the proposal, a capital asset would be classified as held for sale if the government has decided to sell the asset, and it is probable the sale will be finalized within a year of the financial statement date. Capital assets classified as held for sale would be evaluated each reporting period.
GASB is asking its stakeholders to review the proposal and share their feedback by Jan. 5, 2024. Comments can be sent in writing or via an electronic input form.