FASAB proposal addresses opening balances for general PP&E

By Ken Tysiac

The Federal Accounting Standards Advisory Board (FASAB) has issued a proposal that would permit a federal government reporting entity to apply alternative methods in establishing opening balances for general property, plant, and equipment (PP&E).

The proposal was prompted by a Department of Defense request for guidance on establishing opening balances for general PP&E.

“The board is seeking less costly alternatives for [the Department of Defense] to establish opening balances,” FASAB Chairman Tom Allen said in a news release. “A cost-effective means to adopt GAAP may facilitate needed progress. We considered the costs and benefits and concluded that establishing a sound financial management system is of primary importance.”

The alternative methods would include:

  • Use of deemed cost to establish opening balances of general PP&E.
  • Selecting between deemed cost and prospective capitalization of internal-use software.
  • Exclusion of land from opening balances with disclosure of acreage information.

The alternative methods would be available only when presenting information using GAAP for the first time or after a period during which existing systems could not provide the information necessary for producing such GAAP-based financial statements without use of the alternative valuation method. The application of this proposal based on the second condition would be available to a reporting entity just once per line item addressed in the proposal.

Comments are requested by email at fasab@fasab.gov by Feb. 4.

Ken Tysiac (ktysiac@aicpa.org) is a JofA editorial director.

SPONSORED REPORT

Revenue recognition: A complex effort

Implementing the new standard requires careful judgment. Learn how to make significant accounting judgments and document them and collaborate with peers for consistent application.

VIDEO

How to Excel pivot a general ledger

The general ledger is a vast historical data archive of your company's financial activities, including revenue, expenses, adjustments, and account balances. J. Carlton Collins, CPA, shows how to prepare data for, and mine data with, PivotTables.

QUIZ

News quiz: Taking an economic snapshot and looking to the future

Recent news included IRS actions that affect individuals and partnerships and a possibly influential move by a Big Four accounting firm.Take this short quiz to see how much you know about the news.