GASB Statement 104 was released – what to know

Summary

• The Governmental Accounting Standards Board (GASB) issued Statement 104,^[i] titled “Disclosure of Certain Capital Assets,” which took effect for fiscal years beginning after June 15, 2025, and all following reporting periods.
• The statement requires separate disclosure of certain major capital asset classes: leased assets (Statement 87), intangible right-to-use assets recognized by an operator in a public-private or public-public partnership (Statement 94), and Subscription-Based Information Technology Arrangements (SBITAs) (Statement 96). Right-to-use assets cannot be grouped with owned assets in these disclosures, even if they relate to the same underlying asset type. 
• This statement also requires additional disclosure for capital assets held for sale, including the historical cost and accumulated depreciation, by major asset class.
• Governments should consider whether Statement 104 impacts their capital asset financial statement disclosures, including capital assets held for sale.

Background

Statement 104, issued in September 2024, enhances disclosures for certain capital assets and establishes clear guidance for identifying and reporting assets held for sale. 

Previously, disclosure guidance for capital assets were found in Statement 34. Subsequent standards – Statement 87, Statement 94 and Statement 96 – introduced new intangible right-to-use asset classifications, which are treated as capital assets under the existing Statement 34 framework. 

Statement 104 modifies the effects of Statements 87 and 96 on paragraphs 116 and 117 of Statement 34.

Scope and applicability

Disclosure criteria

Under Statement 104, governments must disclose the following asset types separately in the capital asset footnote: 

• Lease assets reported in accordance with Statement 87, by major underlying asset class. 
• Intangible right-to-use assets recognized by an operator in accordance with Statement 94, by major underlying public-public partnership asset class.
• Subscription assets reported in accordance with Statement 96. 
• Other intangible assets, disclosed by major asset class.

Owned assets of the same type of major class should be disclosed separately from intangible assets that represent the right to use an underlying asset.

Held-for-sale definition

Statement 104 defines criteria for identifying capital assets held for sale. An asset is considered held for sale if the government committed to selling the asset and it’s probable that the sale will be finalized within one year of the financial statement date.

When evaluating if a sale is likely within one year, governments should consider factors such as: 

• Whether the asset is available for immediate sale in its present condition.
• Whether an active program to locate a buyer has been initiated, which may include the asset being put out for bid.
• Market conditions for selling that type of asset.
• Regulatory approvals required for sale.

Capital assets do not need to be idle to qualify as held for sale.

Capital or investment asset definition

This statement also clarifies how assets should be classified as capital assets or investments. If an asset is determined to be an investment at the time of acquisition, it should continue to be classified as an investment even if its use changes. Similarly, an asset initially classified as a capital asset should not later be reclassified as an investment. Once the classification is established at acquisition, it should remain unchanged.

When does this take effect?

The provisions of the Statement 104 are effective for fiscal years beginning after June 15, 2025. Early adoption is encouraged. 

Governments should apply the standard retroactively to all periods presented, if practicable, in accordance with Statement 100. If retroactive application to prior periods is not practicable, the government should disclose the reason for not applying the standard to those periods.

What do governments and auditors need to consider?

Many governments already disclose leased and subscription-based assets separately in the notes to the financial statements. As a result, Statement 104 isn’t expected to significantly change the capital asset disclosure. However, governments need to consider the updated terminology and disclosure requirements when preparing their financial statements. They may also consider updating procedures for evaluating capital assets held for sale and reviewing their roll-forward presentation for alignment with the new guidance.

Governments and auditors should consider the following when planning an upcoming audit:

• Discuss capital assets held for sale during audit planning meetings.
• Present leased assets, subscription assets, and other intangible right-to-use assets separately in the capital asset roll-forward, organized by major class of the underlying asset, rather than combining them with other asset types. Statement 104 illustrates a simplified presentation approach.
• Capital assets held for sale should have a separate disclosure including the historical cost and accumulated depreciation by major class of asset. If the capital asset held for sale is pledged as collateral, the disclosure should also include the carrying amount of debt, by major asset class. 
• The provisions of this statement are limited to the disclosure of certain types of capital assets and don’t include any changes to current recognition or measurement requirements. However, if reclassifications are needed, GASB Statement 100 should be followed.

Need help with accounting and financial reporting for your governmental entity? With our deep experience in audit, assurance and accounting for state and local governments, we’re available to discuss your needs. Contact Sikich today with any questions. 

More of our reporting on GASB statement updates can be found here.

^[i] “Disclosure of Certain Capital Assets,” Statement 104. GASB. https://gasb.org/page/ShowPdf?path=GASBS%20104.pdf&title=GASB%20STATEMENT%20NO.%20104,%20DISCLOSURE%20OF%20CERTAIN%20CAPITAL%20ASSETS