New GASB 104 Guidance on Capital Asset Disclosures

Enhanced Transparency and Disclosure Requirements

The Governmental Accounting Standards Board (GASB) has released Statement No. 104, titled “Disclosure of Certain Capital Assets.” This new guidance introduces important changes to how certain types of capital assets should be disclosed in financial statements, aiming to enhance transparency and aid better decision-making. Before diving into the specific requirements of GASB 104, let’s look at when these changes take effect and how organizations can prepare for implementation.

Understanding Implementation Timeline and Encouragement for Early Adoption

The new requirements set forth by Statement No. 104 will be effective for fiscal years beginning after June 15, 2025. However, GASB encourages early adoption to allow stakeholders to benefit from enhanced disclosure practices sooner. With the timeline established, let’s examine the specific disclosure requirements that organizations need to prepare for under GASB 104.

Key Areas of Disclosure Requirement

📊 1. Focused Disclosures for Specific Asset Types

GASB Statement No. 104 mandates that specific categories of capital assets be disclosed separately in the notes section of financial statements. This includes:

• Lease Assets: As defined under GASB Statement 87, these assets must now be disclosed by the major class of the underlying asset.
• Intangible Right-to-Use Assets: Recognized by an operator under GASB Statement 94, these assets must also be disclosed by the major class of the underlying asset.
• Subscription-Based Information Technology Assets: These must be disclosed in line with GASB Statement 96.
• Other Intangible Assets: These should be disclosed separately by major class, covering all other intangible assets not included in the previous categories.

🏢 2. New Requirements for Capital Assets Held for Sale

GASB Statement No. 104 also introduces disclosure requirements for capital assets held for sale. An asset will now be considered held for sale if:

• The government has decided to sell the asset.
• It is probable that the sale will be finalized within one year of the financial statement date.

Governments are required to disclose both the historical cost and accumulated depreciation of these assets by their major class, providing stakeholders with a clearer understanding of the financial implications.

While these new disclosure requirements represent important changes in governmental accounting practice, GASB 104 doesn’t exist in isolation. Understanding how it relates to other GASB statements can help organizations implement a more comprehensive and compliant reporting approach.

A Step Towards Greater Transparency

Statement No. 104 represents an important step towards greater transparency and accountability in governmental financial reporting. By requiring detailed disclosures for certain types of capital assets, GASB aims to help users of financial statements make more informed decisions. For further details, you can access the full statement on the GASB website (www.gasb.org).

Keeping abreast of these changes ensures that we can provide the most accurate and compliant financial reporting for our clients. Stay tuned for more updates and insights on governmental accounting standards.

Expert Support for Your GASB 104 Implementation

REDW’s dedicated professionals understand that implementing new standards like GASB 104 requires more than just understanding the requirements—it demands practical expertise and tailored guidance. We’re here to help you navigate these changes successfully.

Our implementation support includes:

• Personalized readiness assessments to identify affected capital assets
• Custom implementation roadmaps aligned with your fiscal year
• Staff training workshops on new disclosure requirements
• Technical review of draft disclosures before implementation
• Ongoing advisory support throughout your transition

Ready to Start Your GASB 104 Implementation?

Our teams of audit and accounting specialists provide implementation guidance and training. We can help you:

• Evaluate your current capital asset disclosure practices
• Identify gaps between current and required disclosures
• Develop new processes for tracking assets held for sale
• Train your team on new documentation requirements

Contact us today to schedule a GASB 104 readiness consultation. Our trusted experts will help ensure your organization is fully prepared for these new disclosure requirements well ahead of the 2025 implementation deadline.

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