FIS INFO
September 2001
Reporting Capital Assets
Under full accrual accounting, as introduced by the Financial Information Strategy (FIS), the
acquisition cost of an asset is capitalized and allocated as an expense over the time it is expected
to be used.
How will the reporting of capital assets be different
under FIS?
One of the most significant impacts of FIS
and the introduction of full accrual accoun-ting
relates to the reporting of capital assets.
Formerly, the acquisition cost of capital
assets was fully expensed in the year of
acquisition. (Cash reports will continue to
reflect this approach.)
Now, the historical cost of capital assets, less
accumulated amortization, will be reported
on the Statement of Financial Position, and
the annual amortization expense will be
reported on the Statement of Operations.
This means that the department's or agency's
Statement of Operations will reflect the
portion of capital assets consumed over the
course of any given year.
Departmental financial statements will
provide better information on the cost of
program delivery. Also, more effective
stewardship of capital assets will result as
managers will focus on asset management
because of their increased visibility on the
Statement of Financial Position.
What are capital assets?
Treasury Board defines capital assets as being
tangible assets that are purchased, construct-ed,
developed or otherwise acquired and:
-
are held for use in the production or
supply of goods, the delivery of
services or to produce program
outputs;
-
have a useful life extending beyond one
fiscal year and are intended to be used
on a continuing basis; and
-
are not intended for resale in the
ordinary course of operations.
Capital assets also have the following
characteristics:
-
beneficial ownership and control clearly
rest with the government;
-
used to achieve Government objectives;
and
-
a per item cost of greater than $10,000.
(At their discretion, departments or
agencies may set a lower value).
Examples of capital assets include land,
buildings, telecommunications equipment,
computer systems, vehicles, machinery, and
equipment. Capital assets do not currently
include intangible assets such as copyrights,
trademarks, patents, land easements, and
rights of way.
For more information, contact your
departmental financial advisor or visit the
Treasury Board Secretariat Website at
http://www.tbs-sct.gc.ca/fin/sigs/fis-sif/.
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