Capital Assets Account Assignment Paper

Capital Assets Account Assignment Paper

Instructions:

Capital Assets Account Assignment Paper

Comment No.1 to N Z

According to GASB (1999), capital assets accounted as follows:

– Capital assets should be reported at historical cost;

– Donated capital assets should be reported at their estimated fair value at the time of acquisition plus ancillary charges if any;

– Capital assets that are being or have been depreciated should be reported net of accumulated depreciation in the statement of net assets;

– Capital assets that are not being depreciated, such as land or infrastructure assets reported using the modified approach should be reported separately if the government has a significant amount of these assets (pp. 9-11).

In governmental activities, capital assets include general capital assets and proprietary capital assets. “Capital assets used in providing services that are funded primarily by user fees rather than general tax dollars are not classified as general capital assets but rather as proprietary capital assets which have always been capitalized and depreciated” (Robbins & Baldwin, 2002, para. 5).

The FASB does not have specific requirements on how to display of capital assets. Nongovernmental not-for-profit’s capital assets are considered as a part of unrestricted net assets. “In addition to these differences, the governmental not-for-profit presents a classified statement of net assets whereas the nongovernmental not-for-profit presents a statement in liquidity order” (Marsh & Fischer, 2011, para. 45). In the accounting perspective, if not-for-profits receive a donation of assets that will be used in the course of business, the transaction will be recorded as a debit to the asset account and a credit to the organization’s income account. In this case, those capital assets need to be depreciated accordingly.

References

Comment #2 NZ

The leases for the government are regulated by Statement No. 87, Leases. GASB Statement No. 87 provides guidance for lease contracts for nonfinancial assets such as vehicles, heavy equipment, and buildings – but excludes nonexchange transactions, including donated assets, and leases of intangible assets (such as patent and software licenses) (GASB, 2017, para. 2).

On June 28, 2017, the GASB issued its long-awaited revision to governmental lease accounting. Lessees and lessors alike will see significant changes (PWC, 2017, para. 1).

Under a new statement, a lessee government – which pays to use another entity’s capital asset – is required to recognize a lease liability and an intangible asset representing the lessee’s right to use the leased asset, a lessor government – one that leases its capital assets to others – must now recognize a lease receivable and a deferred inflow of resources (Wolfe, 2017, para. 6-7).

According to changes, a lessee will report in financial statements:

– Amortization expense for using the lease asset, which is similar to depreciation, over the shorter of the term of the lease or the useful life of the underlying asset,

– Interest expense on the lease liability,

– Note disclosures about the lease, including a general description of the leasing arrangement, the amount of lease assets recognized, and a schedule of future lease payments to be made (Wolfe, 2017, para. 8).

Also, a lessor will report the following in its financial statements:

–  Lease revenue systematically recognized over the term of the lease, corresponding with the reduction of the deferred inflow,

–  Interest revenue on the receivable,

–  Note disclosures about the lease, including a general description of the leasing arrangement and the total amount of inflows of resources recognized from leases (Wolfe, 2017, para. 9).

Capital Assets Account Assignment Paper

RUBRIC
Excellent Quality 95-100%	Introduction 45-41 points The background and significance of the problem and a clear statement of the research purpose is provided. The search history is mentioned.		Literature Support 91-84  points The background and significance of the problem and a clear statement of the research purpose is provided. The search history is mentioned.			Methodology 58-53 points Content is well-organized with headings for each slide and bulleted lists to group related material as needed. Use of font, color, graphics, effects, etc. to enhance readability and presentation content is excellent. Length requirements of 10 slides/pages or less is met.
Average Score 50-85%	40-38 points More depth/detail for the background and significance is needed, or the research detail is not clear. No search history information is provided.		83-76  points Review of relevant theoretical literature is evident, but there is little integration of studies into concepts related to problem. Review is partially focused and organized. Supporting and opposing research are included. Summary of information presented is included. Conclusion may not contain a biblical integration.			52-49  points Content is somewhat organized, but no structure is apparent. The use of font, color, graphics, effects, etc. is occasionally detracting to the presentation content. Length requirements may not be met.
Poor Quality 0-45%	37-1 points The background and/or significance are missing. No search history information is provided.		75-1 points Review of relevant theoretical literature is evident, but there is no integration of studies into concepts related to problem. Review is partially focused and organized. Supporting and opposing research are not included in the summary of information presented. Conclusion does not contain a biblical integration.			48-1 points There is no clear or logical organizational structure. No logical sequence is apparent. The use of font, color, graphics, effects etc. is often detracting to the presentation content. Length requirements may not be met
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