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Glenn Hegar  ·  Texas Comptroller of Public Accounts

Reporting Requirements for Annual Financial Reports of State Agencies and Universities

Capital Assets

Capital Asset Accounting
Capital Asset Acquisition Cost

Report and record capital assets at their historical costs. Historical costs include:

  • Vendor’s invoice (plus the value of any trade-in or educational allowance, if reflected on the invoice)
  • Sales tax
  • Initial installation cost (excluding in-house labor)
  • Modifications
  • Attachments
  • Accessories or apparatus necessary to make the asset usable and render it into service
  • Ancillary charges (such as freight and transportation charges, site preparation costs and professional fees)

Incidental charges (such as extended warranties, maintenance agreements, additional parts or consumable items) are no longer considered part of the asset cost.

Example:

Asset Cost
Capital Asset $ 10,000
Trade-in 2,000
Installation Cost 250
Freight/Transportation 300
Total Cost of Asset $ 12,550

Note: For more information regarding incidental charges, see the Note and the If/Then table under Capital Asset Acquisition Cost in Chapter 1 of the SPA Process User’s Guide.

The costs of capital assets for governmental activities do not include capitalized interest; however, interest is capitalized on:

  • Assets constructed or otherwise produced for an enterprise’s own use (including assets constructed or produced for the enterprise by others for which deposits or progress payments have been made).
  • Assets intended for sale or lease that are constructed or otherwise produced as discrete projects (for example, ships or real estate developments).

Assets that do not qualify for capitalization of interest:

  • Assets acquired for governmental funds (interest is reported in the statement of activities as a separate line item).
  • Assets in use or ready for their intended use in the earning activities of the enterprise.
  • Assets not being used in the earning activities of the enterprise and not undergoing the activities necessary to get them ready.
  • Assets acquired with gifts and grants where donors or grantors limit acquisition to specific assets to the extent that funds are available.

Disclose the following information (as required by GASB 62, paragraphs 3a and 22) in CANSS regarding to interest costs for qualifying assets for both business-type and component unit activities:

  • For a fiscal year in which no interest cost is capitalized, disclose the amount of interest costs incurred and charged to expense during the fiscal year.
  • For a fiscal year in which some interest cost is capitalized, disclose the total amount of interest costs incurred during the fiscal year and the amount that has been capitalized.
Glenn Hegar
Texas Comptroller of Public Accounts
Questions? Contact statewide.accounting@cpa.texas.gov
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