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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

Capital Asset Categories
Construction in Progress

Construction in progress (CIP) is the economic construction activity status for substantially incomplete:

  • Buildings and other structures
  • Infrastructure (for example, highways, energy distribution systems, pipelines, etc.)
  • Internally generated intangible assets
  • Additions
  • Alterations
  • Reconstruction
  • Installation

Depreciation is not applicable while assets are accounted for as CIP.

CIP assets are capitalized to their appropriate capital asset categories upon the earlier occurrence of either:

  • Execution of substantial completion contract documents
    –OR–
  • Occupancy
    –OR–
  • When the asset is placed into service

Use the CIP category if:

  • The asset under construction meets the capitalization threshold for its finished asset category
    –AND–
  • If the CIP project is one year or more in length and/or spans two fiscal years

The reduction in the CIP account and increase in the appropriate asset account are reported in the completed CIP column of Note 2.

As required by GASB 89:

On financial statements prepared using the economic resources measurement focus, agencies must recognize an interest cost incurred before the end of a construction period as an expense in the period in which the cost is incurred. Such an interest cost is not capitalized as part of the historical cost of a capital asset.

On financial statements prepared using the current financial resources measurement focus, agencies must recognize an interest cost incurred before the end of a construction period as an expenditure on a basis consistent with governmental fund accounting principles.

Note: On the CAAB 101S SPA report, the reclass CIP column must net to 0 (zero). If it does not, contact your SPA analyst to determine what corrections/adjustments are required.