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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

Impairment of Capital Assets and Insurance Recoveries

GASB 42 establishes accounting and reporting requirements for impairment of capital assets and insurance recoveries. Agencies must comply with the Comptroller’s office guidance governing accounting for and reporting for:

An asset impairment is a significant, unexpected decline in a capital asset’s service utility. The decline is due to events or changes in circumstance that:

Note: The only impairments reported under GASB 42 are those that are considered permanent.

Governments hold assets because of the services they provide; therefore, an impairment is one affecting the service utility of an asset. Service utility is the usable capacity expected at acquisition.

Usable capacity is different from the level of utilization:

Temporary Impairments

Report only impairments considered permanent. Do not report the impairment amount if there is factual evidence that an impairment is temporary. Do not reverse the impairment in future years even if the events or circumstances leading to it reverse or if service utility is restored.

Assets that are Idle

If an impaired capital asset is idle at fiscal year-end, disclose the carrying amount and a general description in Note 2. This applies regardless of whether the impairment is expected to be permanent or temporary.