GASB addresses disclosure and classification of capital assets

GASB issued a proposal Thursday that would establish requirements for certain types of capital assets to be disclosed separately for purposes of note disclosures.

The changes are intended to help financial statement users make informed decisions about the assets and evaluate accountability.

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

GASB’s Statement No. 87, Leases, and No. 96, Subscription-Based Information Technology Arrangements, created certain types of capital assets, which are described as “right-to-use” assets, according to a news release. Because of the recognition of those new types of assets, GASB decided to consider the effectiveness of existing classifications.

The draft addresses 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.

Under the proposal, a capital asset would be classified as held for sale if (a) the government has decided to sell the asset, and (b) 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.

Comments on the proposed draft will be accepted through Jan. 5, 2024. They may be submitted by email to director@gasb.org or through an electronic input form.

To comment on this article or to suggest an idea for another article, contact Kevin Brewer at Kevin.Brewer@aicpa-cima.com.