Question

In: Accounting

Generally accepted principles of accounting for typical categories of capital assets based on applicable GASB standards...

Generally accepted principles of accounting for typical categories of capital assets based on applicable GASB standards for government unit as:

I.      Land

II.    Building and building improvements

III.   Infrastructure assets

IV.   Construction work in progress

V.    Intangible assets

Required:

a)     Write a report on the classification of general capital assets of a government. Explain the broad categories given above with proper examples of each that are relevant to the government unit.

b)     Show a sample statement of capital Asset disclosure of a government unit.

Solutions

Expert Solution

As per the Government Accounting Standard Board, term capital assets includes :-

land,

Improvements to land

Easements

Buildings

Building improvements

Vehicles

Machinery

Equipment

Works of art and historical treasures

Infrastructure

All other tangible

Intangible assets

All the above assets are used in operations and that have initial useful lives extending beyond a single reporting period.

Board Categories Given in the Question are explain below:

· Land: Land includes the investment, fee simple in real estate other than building and/or improvements

· Building: Buildings include all local government owned buildings except those whose condition prevents their serving any present or future useful purpose. Permanently installed fixtures to or within the building, such as lighting fixtures and plumbing are considered a part of the building. The costs of major improvements to a building, such as additions and renovations, should be capitalized and recorded as a part of the building asset value

· Infrastructure: Infrastructure includes capital expenditures relating to roads, curbs and gutters, streets, sidewalks, shoulder safety, drainage systems and lighting systems

· Building and Other Improvements: The acquisition cost of buildings, improvements, leasehold improvement sand infrastructure includes all expenditures in connection with its procurement, such as: Purchase price or construction costs, Fixtures attached to the structure, Architect’s fees, Costs of permits and licenses, Payment of damages, Insurance costs during construction, Interest incurred for the purpose of the project –interest on debt

· Intangible Assets: Intangible assets include software, easements, and right of ways. An intangible asset can only be recognized as an asset if it is identifiable, meaning it can be sold, transferred, licensed, rented, exchanged or it arises from contractual or other legal rights as per GASB Statement


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