Reporting of Capital Assets. (Infrastructure, land and improvements to land, easements, buildings and building improvements, vehicles, equipment, works of art and historical treasures, and all other tangible and intangible assets that are used in operations and that have initial useful lives extending beyond a single reporting period.)

Capital assets should be reported at historical cost (or estimated historical cost) plus capitalized interest and ancillary charges such as, freight charges, site preparation costs and professional fees.

•Depreciation Method - Capital assets should be reporting net of accumulated depreciation in the statement of net assets. (Accumulated depreciation may be reported on the face of the statement or disclosed in the notes.) Capital assets should be depreciated over their useful lives unless they are inexhaustible assets such as land and land improvements.

Depreciation expense should be reported in the statement of activities. Shared capital assets (for example, a facility that houses the police department, the building inspector or the utility office) should be allocated as a direct expenseof the appropriate function. In other words, allocate a portion of depreciated expenses across the tenants.

Capital outlays and maintenance of public works or sanitation departments, for example, would be reported as a direct expense and, as a separate line item in the statement of activities.


•Modified Approach Method - Do not report depreciation, nor capitalize any of the money spent. Capital Assets, such as land or infrastructure assets should be reported separately if the government has a significant amount of these assets. Also report major classes of assets, such as infrastructure, buildings and improvements, vehicles and equipment. Governments are not required to restate prior periods for purposes of providing the comparative data. Report, as an annual expense, all monies spent to maintain or improve the condition of the assets.