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Glenn Hegar  ·  Texas Comptroller of Public Accounts

Reporting Requirements for Annual Financial Reports of State Agencies and Universities

Notes & Samples

NOTE 8 – Leases
Capital Leases

Disclose if your agency entered into long-term leases for financing the purchase of certain capital assets and if such leases are classified as capital leases for accounting purposes. These are recorded at the present value of the future minimum lease payments at the inception of the lease. The required disclosures are:

  • General leasing arrangements.
  • Amount of assets and liabilities recorded under capital leases presented by asset categories. Report governmental activities, business-type activities, discretely presented component units and fiduciary funds separately.
  • Minimum future lease payments (debt service requirements) for each of the next five years (and in five-year increments thereafter) and a grand total showing a deduction for the amount of interest to reduce the net minimum future lease payments to their present value. Disclose principal and interest payments in separate columns.

Note: Use the LNSS web application to enter the capital lease debt service requirements. Use the data from the Capital Leases Debt Service Report generated from the LNSS web application to create the required disclosure in Note 8. This information is populated in the LTLN web application.

  • Total of minimum sublease rentals to be received in the future under noncancelable subleases.
  • Total contingent rentals actually incurred.
  • Separately identify capital assets and accumulated depreciation recorded under capital leases.

In addition to these disclosures, provide a general description of the lease agreement, including items such as the existence of renewal or purchase options and restrictions imposed by the lease agreement.

WARNING: Beginning balances must be the same as the prior year’s ending balances. Beginning balances are populated in the LTLN web application. Ending balances must tie to the combined balance sheet amount in the long-term liabilities adjustments for the line item “capital lease obligations.”

Glenn Hegar
Texas Comptroller of Public Accounts
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