Policy References:

Chapter 405 of the Laws of 1981 required the State to develop a comprehensive Capital Asset reporting system that monitors and reports upon the State’s capital assets.

GASB Statement No. 34 – Basic Financial Statements—and Management's Discussion and Analysis—for State and Local Governments
(GASB Codification Section 1400 – Reporting Capital Assets)

GASB Statement No. 51 – Accounting and Financial Reporting for Intangible Assets

Process and Document Preparation:

The State developed a comprehensive Capital Assets reporting system in compliance with Chapter 405 of the Laws of 1981 that monitors and reports upon the State’s capital assets. The Statewide Capital Asset Accounting System (the system), maintained by the Office of General Services (OGS), was significantly improved and updated in 1998. In October 2015, the balances in the system were converted to the new Statewide Financial System Asset Management Module (SFS AM) and the system was retired. The SFS AM continues to be maintained by OGS. This section describes policies that are applied to the extent practical in our ACFR presentation for the recording of capital assets.

The implementation of GASBS 34 necessitated significant changes to capital asset reporting including: the presentation of all capital assets on the face of the State’s government-wide financial statements; the inclusion of depreciation expense and accumulated depreciation or the use of the alternative modified approach; and the inclusion of all infrastructure assets (roads, bridges, sewer systems, water systems, etc.) These additional reporting elements and new requirements are described in detail in the following sections.

CAPITAL ASSETS

The major issues related to accounting for capital assets include the following:

• Criteria for recording general capital assets including infrastructure
• Recording general capital assets
• Valuation of capital assets
• Maintenance of capital asset records
• Disposition of general capital assets
• Treatment of infrastructure assets
• Depreciation and the modified approach for infrastructure capital assets

College and University funds (SUNY and CUNY Senior Colleges) and public benefit corporations 

NECESSITY FOR GENERAL CAPITAL ASSETS REPORTING

All capital assets, including infrastructure meeting defined levels of materiality, are included in the State’s government-wide financial statements as required by GASBS 34. These assets are reported in a very similar manner to capital assets in a commercial accounting environment and are also subject to depreciation and/or the modified approach as a method to reflect asset condition.

The purpose of recording capital assets in the Statement of Net Position is to record the value of these assets (net of depreciation) as general assets of the State. Capital assets will be depreciated over defined useful lives as indicated below.

CRITERIA FOR RECORDING GENERAL CAPITAL ASSETS INCLUDING INFRASTRUCTURE

General capital assets, consisting of tangible and intangible asset, should be capitalized when all of the following criteria are met:

Tangible Assets

• The asset is tangible in nature, complete and is not a component part of another item.
• The asset is used in the operation of the State's activities.
• The asset has a useful life of two years or more and provides a reasonable benefit throughout that period.
• The individual asset is of significant value (the State will use the following guidelines):
  • All Land
  • Buildings
  • Machinery and Equipment in excess of $40,000
  • Office Furniture and Equipment in excess of $40,000
  • Building and Land Improvements and Renovations in excess of $100,000
  • Infrastructure Assets in excess of $1,000,000
  • Library Books in excess of $5,000
  • Works of Art and Historical Treasures in excess of $40,000

For major construction projects, the $100,000 capitalization limit should apply to the total capital expenditures rather than the individual assets. For bulk purchases of furniture, equipment, etc., the individual assets must exceed $40,000 to be capitalized.

Intangible Assets

• An intangible asset is an asset that lacks physical substance, is non-financial in nature and has an initial useful life extending beyond a single reporting period.
• Intangible assets must be identifiable to be reported. They are identifiable if either of the following conditions is met:
  • The asset is separable – capable of being separated or divided from the government and sold, transferred, licensed, rented or exchanged.
  • The asset arises from contractual or other legal rights, regardless of whether those rights are transferable or separable from the entity or from other rights and obligations.
• For intangible right-to-use lease and subscription-based information technology arrangement asset capitalization thresholds, refer to Chapter XVI – Section 4O.
• For other types of intangible assets, the State will capitalize assets with values in excess of $1,000,000.

RECORDING GENERAL CAPITAL ASSETS

General capital assets should be classified in the appropriate account code to indicate the type of fixed asset owned.

General capital assets should be classified by type within the following major classifications and depreciated over the indicated estimated useful lives:

A renovation is a project performed on an already existing component while an improvement is the addition of a new component where one did not previously exist. 

Renovations will be recorded within the capital asset system as a capital asset addition if they meet the following criteria:

• The renovation costs more than $100,000
• It occurs when 75% or more of the estimated useful life of the component has expired
• It extends the useful life of the component being renovated

The original component being renovated will be retired if the actual cost of the renovation is 75% or more of the current replacement cost of the component being renovated.

To be considered a general fixed asset, an improvement must:

• Cost over $100,000
• Have a useful life of two years or more

VALUATION OF CAPITAL ASSETS

General capital assets should be accounted for at historical cost (at estimated historical cost if actual historical cost is not practicably determinable). Cost is defined as consideration given or received whichever is more objectively determinable. It includes the purchase price or construction costs and also additional charges to place a fixed asset in its intended location and condition for use (i.e., freight and transportation charges, site preparation expenditures, professional fees, and legal claims directly attributable to asset acquisition). In the case of land, ancillary costs should also be included, such as legal and title fees, damage payments, site preparation costs (clearing, filling, and leveling), and the demolition of unwanted structures. In addition, costs of buildings and improvements other than the costs of construction should include professional fees of architects, attorneys, appraisers, etc., and related costs incurred during the period of construction.

Capitalizable costs include, but are not limited to, the following:

1. Land:
   • Original contract price
   • Brokers' commissions
   • Legal fees for examining and recording title
   • Cost of title guarantee insurance policies
   • Cost of real estate surveys
   • Cost of an option when it is exercised
   • Special paving assessments
   • Cost of razing an old building existing when the land is originally acquired
   • Cost of cancellation of unexpired lease
   • Payment of noncurrent taxes accrued on the land at date of purchase if payable by purchaser
2. Buildings:
   • Original contract price of cost of construction
   • Expenses incurred in remodeling, reconditioning or altering a purchased building to make it available for the purpose for which it was acquired
   • Cost of excavation, grading or filling of land for the specific building
   • Payment of noncurrent taxes accrued on the building at date of purchase if payable by purchaser
   • Architects' and engineers' fees for design and supervision
   • Costs of temporary buildings used during the construction period
3. Machinery and Equipment:
   • Original contract or invoice cost
   • Freight and drayage in, cartage, import duties, handling and storage costs
   • Specific in-transit insurance charges
   • Sales, use and other taxes imposed on the purchase
   • Costs of preparation of foundations and other costs in connection with making a proper site for the assets
   • Installation charges
   • Costs for reconditioning used equipment to make it usable for the purpose it was purchased
4. Construction in progress:
   
   It is the responsibility of OGS to provide OSC with data related to the recording of construction in progress. This information is collected from OGS Design and Construction, State University Construction Fund and the Dormitory Authority. These three entities are responsible for most of the construction affecting the NYS Fixed Asset System.
   
   Following are types of expenditures that should not be recorded as capital assets (not all inclusive):

• Cost relating to the removal or demolition of buildings, structures, equipment or other facilities. The two exceptions are as follows:
  • The cost to remove or demolish a building or other structure existing at the time of acquisition of land with the intention of removal or demolition to accommodate its intended use (such cost is considered a part of the cost of the land).
  • The cost to remove or demolish a building or other structure with the intention of replacing the old asset (such cost is considered a part of the cost of the new capital project).
• The cost of relocating a facility including the cost of relocating personnel. The cost of equipment rearrangement within a facility or the transfer of individual assets from one location to another should also be expensed.
• Administrative and executive salaries even though a portion of such salary costs are related to fixed asset acquisitions.
• Costs incurred on assets that were not purchased, e.g., surveying, title searches, legal fees, and other expert services on land not purchased.
• Extraordinary costs incidental to the construction of capital assets such as those due to strike, flood, fire or other casualties.
• The cost of abandoned construction.
• The costs of normal repairs and maintenance that do not add to the value or extend the lives of assets materially are not capitalized, but are shown as expenses in the year incurred.

5. Intangible Assets

• Internally Generated Intangible Assets – expenses should only be capitalized when all of the following have occurred:
  • Determination of the specific objective of the project and the nature of the service capacity that is expected to be provided by the intangible asset upon the completion of the project
  • Demonstration of the technical or technological feasibility for completing the project so that the intangible asset will provide its expected service capacity
  • Demonstration of the current intention, ability, and presence of effort to complete or, in the case of a multiyear project, continue development of the intangible asset.
• Other intangible assets should be capitalized when one of the following two conditions is met:
  • The asset is capable of being separated or divided from the government and sold, transferred, licensed, rented, or exchanged, either individually or together with a related contract, asset, or liability
  • The asset arises from contractual or other legal rights, regardless of whether those rights are transferable or separable from the entity or from other rights and obligations.

Donated capital assets should be recorded at their acquisition value at the date of donation. Per Paragraph 79 of GASBS 72 - Fair Value Measurement and Application, acquisition value is the price that would be paid to acquire an asset with equivalent service potential in an orderly market transaction at the acquisition date, or the amount at which a liability could be liquidated with the counterparty at the acquisition date. 

General capital assets acquired by tax foreclosure which are to be retained by the government for its own use should be capitalized at their fair value on the date foreclosed, but not in excess of the tax liens satisfied by such foreclosure.

MAINTENANCE OF CAPITAL ASSET RECORDS

Once the value of the general fixed asset has been determined, a consistent means of maintaining records should be applied. The following information shall be maintained:

• Major asset class
• Function and activity
• Reference to acquisition source document
• Manufacturer, Model Number, Serial Number
• Acquisition date
• Date last inspected
• Name and address of vendor
• Condition
• Short description of asset
• Purchase Order/Contract Number
• Organization unit charged with custody
• Location (department/division, facility, building number, floor)
• Fund and account from which purchased
• Quantity
• Method of acquisition
• Method of depreciation
• Estimated useful life
• Estimated salvage value
• Date, method, and authorization of disposition
• Economic life remaining
• Percent utilized
• Flood code
• Historical code
• Square footage
• Deed number
• Proceeds received upon disposition

Furniture and Fixtures and Machinery and Equipment should be aggregated by agency with each agency responsible for individual details.

DISPOSITION OF GENERAL CAPITAL ASSETS

The disposition of capital assets should be recorded by reducing the appropriate account(s) for the total cost of the asset and its associated depreciation or amortization.

TREATMENT OF INFRASTRUCTURE ASSETS

Infrastructure consists of roads, bridges, curbs and gutters, streets, sidewalks, drainage systems, lighting systems, historic monuments, and similar assets that are immovable and of value only to the State. 

Roads and bridges maintained by the Department of Transportation are reported using the modified approach. Under this method, the State will not report depreciation expense for roads and bridges but will capitalize all costs that add to the capacity and efficiency of State-owned roads and bridges. 

Other infrastructure assets are included net of appropriate depreciation in the government-wide financial statements.

DEPRECIATION AND MODIFIED APPROACH FOR INFRASTRUCTURE CAPITAL ASSETS

The reporting of depreciation is required for the government-wide financial statements. Capital assets except for Land, Land Preparation, Library Books, and Construction in Progress must be depreciated over the useful lives described above or the modified approach may be used for certain infrastructure assets that meet the criteria of:

• Maintaining an asset management system that includes a current inventory of eligible infrastructure assets;
• Conducting condition assessments of eligible assets and summarizing the results using a measurement scale;
• Estimating each year the annual amount necessary to maintain and preserve the eligible assets at the condition level established and disclosed by the State; and
• Documenting that the assets are being preserved approximately at, or above, the established condition level.

SUNY AND CUNY SENIOR COLLEGES FUNDS AND PUBLIC BENEFIT CORPORATIONS

Capital assets reported for SUNY and CUNY Senior Colleges Funds and public benefit corporations are obtained from the audited financial statements issued by the entities comprising these funds and are included in the government-wide financial statements of the State.

Guide to Financial Operations

REV. 12/26/2023