The government came up with new guidelines that were supposed to be followed by the accountants in giving financial reports on their various departments. The new accounting standards were formulated in the year 1999, and that were supposed to create changes in the manner in which local governments gave their financial reports. For the first time in history, the government’s reports contained reports on how the governments used money for the creation and provision of services to the public. The statements gave a full report on the money that was spent in providing full services to the public by the government of the day, including any infrastructure that was built by the government. The civic federation was the first body to come up in full support of the adoption of the guidelines that were put in place for the accounting departments. Moreover, they issued a statement of support of the adoption of the new standards through a statement that was read in parliament by their representative in the advisory committee.
GASB Statement number 34 as a new concept required that all government entities to use the accrual procedures when conducting their accounting procedures such that all the capital assets are depreciated. The effective dates for the depreciation of the capital assets were based on the revenues that were gained during that particular financial year. Moreover, the depreciation of the mentioned assets was to be done in there phases. The assets that managed to generate a revenues of more than one hundred million or more had to be dealt with within the first fiscal year that begun immediately after June 15, 2001. Secondly, there were those assets that had managed to generate revenue of either equal to or more than ten million dollars but less than one hundred million dollars. Such assets were supposed to comply within the first financial year that begun on June 15, 2003.
In this case, the capital assets were defined as the assets that have a useful life that lasted for more than just the single reporting period, and they include assets such as land and the land improvements. Additionally, other assets such as buildings and vehicles also fell under the same category. Others included assets such as the machineries and equipment are that were used by the governments in provision of services to the public. The works of art and the historical treasures were part of what were supposed to be considers as capital assets.
The infrastructure assets were those that were thought to have long lives that lasted for more than the fiscal financial reporting period. Moreover, such assets are in most cases stationary therefore becoming immovable. Such assets included assets such as roads, tunnels that mainly constructed to be use d by the commuter trains. Apart from that, there were lighting systems and bridges that were also constructed under the infrastructure assets category. In giving financial reports for the infrastructures, the accounting bodies were expected to do so using the past historical costs that were incurred (Sage report). Such cost included the freight costs as well as any other installation charges that were incurred during that period. For the case of the assets that were donated and not purchased, the accounting body was supposed to record their values at the fair market value during the period in which such assets were received.
For the case of the depreciable assets, their values were supposed to be reported on the net value of the accumulated depreciation. The amount of depreciation on the assets all depended on the timeframe that it took for such an asset to depreciate as well as the rate of use of such depreciable assets. On the other hand, the non-depreciable assets were supposed to be reported separately from the depreciable assets. In giving reports concerning the depreciable assets, such reports were supposed to be made on the statement of activities since such depreciations were experienced during the use of such assets (sage report). In giving the final reports on the assets, it was important that the liabilities had to be subtracted first so that the net value of the assets is obtained. The remaining net value of the assets was supposed to be reported under the following categories: The first category included the amount of money that was invested in the capital assets, and that would include the net value obtained after deducting the related debts owed to the creditors. Apart from that, there was the second category that included the restricted assets and the final category included the unrestricted assets. The restricted assets were considered to be those assets that had constraints imposed on them either for use by the contributors or by the creditors. In case of permanent endowments, the net assets were supposed to be displayed in two categories depicting whether they were expendable or non-expendable assets. In case the assets were non-expendable then they would have to be retained in the perpetuity category for the purposes of consistency in reporting.
Finally, the depreciation of the assets was supposed to be calculated based on the useful life of the assets (Civic federation, 2004). Moreover, the depreciation was supposed to be conducted in both a systematic manner as well as a rotational manner. The accountants were allowed to sue either the straight line method of depreciating the assets or alternatively use the declining-balance method. For the case of the declining method, they could either use the double declining method or choose to use the 150 percent declining balance method. The value of the government’s assets could be determined through the use of published guidelines that could be obtained from the professional organizations. Order Unique Answer Now