CAPITAL ASSET ACCOUNTING AND REPORTING RULES BY FUND - 8670.1

(New: 10/2020)

(New and renumbered from 8620, 8621, and 8622)

Capital asset accounting and reporting requirements differ depending on the owner fund's classification and the measurement focus used.

State funds classified on a Generally Accepted Accounting Principles (GAAP) basis include the following:

1. Governmental
2. Proprietary
3. Fiduciary

State funds classified on a Budgetary/Legal basis include the following:

1. Governmental Cost
2. Non-Governmental Cost

See the Manual of State Funds for the classifications of each state fund.

GAAP Basis

1. Governmental Funds
   • Capital assets acquired with governmental fund resources are not capitalized in the governmental fund financial statements. Instead, capital assets are reported in the Capital Assets Group of Accounts.
   • Capital assets do not appear in governmental fund financial statements because they are presented using the current financial resources measurement focus and modified accrual basis of accounting.
   • Capital assets purchased or constructed with governmental fund resources are expensed in the period they are acquired.
2. Proprietary Funds
   • Capital assets acquired with proprietary fund resources are capitalized and depreciated/amortized within those funds over their estimated useful lives.
   • Capital assets do appear in proprietary fund financial statements because they are presented using the economic resources measurement focus and the accrual basis of accounting.
3. Fiduciary Funds
   • Capital assets acquired with fiduciary fund resources, other than some agency funds, are capitalized and depreciated/amortized within those funds over their estimated useful lives.
   • Capital assets do appear in fiduciary fund financial statements because they generally follow the same measurement focus and basis of accounting as do proprietary funds.

Government-Wide Financial Statements

In the government-wide financial statements, capital assets are capitalized and depreciated/amortized over their estimated useful lives. Capital assets relating to governmental activities are recorded only in the government-wide financial statements whose measurement focus is all economic resources and liabilities of the state.

Budgetary/Legal Basis

1. Governmental Cost Funds: (Bond Funds; Federal Funds, and some Trust Funds)
   • Capital assets acquired with governmental cost fund resources are not capitalized in the governmental fund financial statements. Instead, capital assets are reported in the Capital Assets Group of Accounts.
   • Capital assets do not appear in governmental cost fund financial statements because they are presented using the current financial resources measurement focus and modified accrual basis of accounting.
   • Capital assets purchased or constructed with governmental cost fund resources are expensed in the period they are acquired
2. Non-Governmental Cost Funds: (Working Capital and Revolving Funds; Public Service Enterprise Funds; Retirement Funds; some Trust Funds [non-federal])
   • Capital assets acquired with non-governmental cost fund resources are capitalized and depreciated/amortized within those funds over their estimated useful lives.
   • Capital assets do appear in non-governmental cost fund financial statements because they are presented using the economic resources measurement focus and the accrual basis of accounting.