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Reporting Requirements for Annual Financial Reports of State Agencies and Universities

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Reporting Requirements for Annual Financial Reports of State Agencies and Universities

Capital Assets

Sale, Disposal or Interagency Transfer of Capital Assets

When an asset is sold to a non-state agency, the resulting gain or loss must be recognized. A gain or loss occurs when the sale price does not equal the net book value of the asset.

  • Gain — the sale price plus accumulated depreciation is greater than the historical cost of the asset being sold.
  • Loss — the sale price plus accumulated depreciation is less than the historical cost of the asset being sold.

When an asset is transferred between state agencies, a net increase or decrease is realized instead of a gain or loss.

  • Net increase — the value of the asset plus accumulated depreciation is greater than the historical cost of the asset being transferred.
  • Net decrease — the value of the asset plus accumulated depreciation is less than the historical cost of the asset being transferred.

When an asset is transferred, both agencies must agree and book the same value for the asset being transferred. The transfer in agency (including agencies not reporting to SPA or agencies using local depreciation or amortization calculation methods) must record the amount provided by the transfer out agency. Reconciling differences are adjusted during the ACFR preparation. For more information, see Recording Interagency Transfers of Capital Assets.