The Governmental Accounting Standards Board (GASB) statement 104 Disclosure of Certain Capital Assets requires State and local governments to provide detailed information about capital assets in notes to financial statements. This is a significant change to how governmental entities will report and disclose capital assets going forward.
The goal is to separate the intangible capital assets from tangible capital assets in the financial statement to make it easier to evaluate capital assets for the purposes of valuation, maintenance, and ownership interest. Read on to learn about these changes. The requirements of this Statement are effective for fiscal years beginning after June 15, 2025, and all reporting periods thereafter.
Separate Capital Asset Disclosure Notes
GASB 104 requires the following types of capital assets to be disclosed separately in the capital assets note disclosures:
- Lease assets recognized in accordance with Statement No. 87, Leases
- Intangible right-to-use assets recognized in accordance with Statement No. 94, Public-Private and Public-Public Partnerships and Availability Payment Arrangements, should be disclosed separately by major class of underlying asset in the capital as-sets note disclosures.
- Subscription-Based IT arrangement assets recognized in accordance with Statement No. 96, Subscription-Based Information Technology Arrangements.
- In addition, this Statement requires intangible assets other than those three types to be disclosed separately by major class.
Capital Assets Held for Sale
In order to ensure financial statements accurately reflect the status of assets that are expected to be sold, GASB Statement 104 also requires additional disclosures for capital assets held for sale. A capital asset is for sale if (a) the government has decided to pursue the sale of the capital asset and (b) it is probable that the sale will be finalized within one year of the financial statement date.
The following factors are considerations when evaluating whether it is probable that the sale will be finalized within one year:
- The asset is available for sale in its present condition;
- An active program to locate a buyer has been initiated;
- Market conditions for selling the asset;
- Regulatory approvals needed prior to selling the asset.
This Statement requires that capital assets held for sale be evaluated each reporting period.
A capital asset held for sale should remain classified within its appropriate major category of capital assets and, as such, should be included in the net position as part of the net investment in capital assets. The government should disclose both the historical cost and accumulated depreciation of capital assets held for sale, organized by major class. Additionally, for each major class of asset, the government should disclose the carrying amount of any debt for which the asset is pledged as collateral.
Implement GASB 104
Avizo maintains knowledge of GASB changes and will be working with our clients to keep them updated as these changes begin to impact your organizations. To best prepare for this change, you can start identifying which capital assets will need to be disclosed separately based on the criteria described in this article.
We can work with your organization to train your staff and update your accounting policies and procedures to align with the new requirements. This may involve revising asset classification processes and ensuring that all relevant assets are identified and reported correctly. As we begin to prepare your 2026 financial reports, we will work with you to ensure your reporting is accurate. If you have any concerns or questions now, you can always reach out and schedule a meeting with us to learn more.
Kirsten Owens, CPA
A Manager on our assurance team, Kirsten maintains expertise to provide auditing services with a specialization in Avizo’s governmental and construction-based niches. She is one of the primary leads on our in-field audits and completes training for all members of the firm before they visit clients offices.
