Reporting Requirements for Annual Financial Reports of State Agencies and Universities

Capital Assets

Impairment of Capital Assets and Insurance Recoveries
Reporting Impairment Amounts in the AFR and in USAS

In the AFR and in USAS, report the total impairment losses as determined by the impairment method calculation. This amount must match the amount reported in the State Property Accounting (SPA) system for the fiscal year.

Report the total loss as outlined below:

• On the government-wide statement of activities — As a program expense, unusual or infrequent items.
• On the statement of revenues, expenses and changes in net position — As an operating expense, unusual or infrequent items (if the impairment loss occurs in a proprietary fund)

Note: If the impairment loss occurs in a governmental fund, do not report it on the fund financial statements — report the impairment loss only on the government-wide statement of activities.

Unusual or infrequent items are transactions and other events that are unusual in nature or infrequent in occurrence. If the impairment loss is significant and meets this definition, report the loss with COBJ 7857. If not, report as an expense with COBJ 7855.

For more information on the correct COBJs and roll ups to use to record impairment losses in USAS, see Impairment and Insurance Recovery COBJs and Roll Ups.

Disclose each impairment with a general description and amount of the loss in Note 2. At the end of each fiscal year, the Comptroller’s office analyzes all the agencies’ asset impairment data and determines which events (per GASB 42) are significant enough to include in the State of Texas Annual Comprehensive Financial Report (ACFR).

All the impairments the agency deems significant to its own operations, that have been reported to SPA and are included in the agency’s AFRs, might not appear in the ACFR.