Last updated on January 25th, 2024

Last September, the Governmental Accounting Standards Board (GASB) issued a proposal to require certain types of capital assets be disclosed separately for purposes of note disclosures and certain assets to be classified as “held for sale.” Stakeholders have been reviewing the proposal and comments were accepted until January 5.

According to the Exposure Draft, Statement requirements would be effective fiscal years beginning after June 15, 2025 (although earlier application would be encouraged), with certain assets to be reported retroactively for periods covered by the basic financial statement.

State and local governments must provide details about capital assets in financial statement notes. Prompted by Statement 87 (Leases) and 96 (Subscription-Based Information Technology Arrangements) creating “right-to-use” assets, GASB began considering existing classifications’ effectiveness. The Board proposed certain types of assets be disclosed separately in capital assets note disclosures, including:

1. New! Capital assets held for sale, by major class of asset
2. Lease assets reported under Statement 87, by major class of underlying asset
3. Subscription assets reported under Statement 96, and
4. Intangible assets other than leases and subscriptions, by major class of assets.

The proposed new classification of “Capital assets held for sale” would be evaluated each reporting period and apply for assets the government has decided to sell if the sale would likely be finalized within one year of the financial statement date. Factors associated with the likelihood of sale include, but are not limited to:

1. Asset is available for immediate sale in current condition
2. An active program to locate a buyer has been initiated
3. Market conditions for that type of asset
4. Regulatory approvals to sell the asset

If requirements cannot be applied retroactively to all periods in a basic financial statement, a reason must be given. Changes adopted related to “capital assets held for sale” should be reported as a reclassification resulting from an accounting principle change.

Overall, proposed updates would make reporting across government entities more consistent and comparable, and the additional information would better inform decision-making and assess accountability.

We will keep you updated as more information becomes available. In the meantime, please know RBT CPAs are here to support your municipality’s accounting, tax, audit, and advisory needs. Give us a call to learn more.

RBT CPAs is proud to say 100% of its work is prepared in America. Our company does not offshore work, so you always know who is handling your confidential financial data.