GASB Statement No. 104, Disclosure of Certain Capital Assets, changes how local governments present certain capital assets in their financial statement notes. For municipal finance directors, the immediate task is reviewing existing asset records, identifying property that may qualify as held for sale and determining whether current disclosures provide the required detail.

What GASB 104 Means for Municipal Capital Asset Reporting

Issued in September 2024, GASB 104 is effective for fiscal years beginning after June 15, 2025. For municipalities with September 30 or December 31 fiscal year-ends, the requirements generally first apply to fiscal year 2026.

The standard builds on GASB 34, which already requires capital asset disclosures by major class. GASB 104 adds specific presentation requirements for certain intangible assets and establishes new disclosures for capital assets held for sale.

The changes affect financial statement disclosures rather than existing asset recognition or measurement requirements.

Understanding the New Capital Asset Disclosure Requirements

Capital assets held for sale

Under GASB 104, a capital asset qualifies as held for sale when both conditions are met:

1. The government has decided to pursue the sale.
2. It is probable that the sale will be finalized within one year of the financial statement date.

Finance directors must consider whether the asset is available for immediate sale, whether efforts to locate a buyer have begun, current market conditions and any required regulatory approvals.

Consider a municipality preparing to sell an unused public works building. A decision to pursue the sale is relevant, but the finance department must also evaluate whether completing the transaction within the required period is probable.

Governments must reassess these conditions each reporting period.

Qualifying assets remain within their appropriate capital asset classes. Additional note disclosures must identify historical cost and accumulated depreciation or amortization separately by major asset class. Governments must also disclose the carrying amount of debt for which those assets are pledged as collateral.

These requirements apply to governmental and business-type activities.

Lease assets, subscription assets and other intangible assets

GASB 104 also requires separate presentation within existing capital asset notes for:

• Lease assets under GASB 87, by major class of underlying asset.
• Intangible right-to-use assets recognized by operators under GASB 94, by major class of underlying partnership asset.
• Subscription assets under GASB 96, including applicable SBITA arrangements.
• Other intangible assets, by major class.

Right-to-use assets cannot be grouped within the same major class as owned assets of that type.

Many of these assets were already subject to accounting and disclosure requirements. GASB 104 clarifies their presentation within the capital asset disclosures established by GASB 34.

A GASB 104 Readiness Checklist for Finance Directors

Use this checklist when reviewing municipal capital asset records and preparing financial statement disclosures.

• Review the capital asset register. Confirm that recorded assets have appropriate classifications, historical costs and accumulated depreciation or amortization.
• Identify affected asset categories. Review lease assets, subscription assets and other intangible assets for separate disclosure.
• Review potential asset sales. Identify buildings, vehicles, equipment or other capital assets the municipality has decided to sell.
• Evaluate held-for-sale criteria. Determine whether each potential sale meets both GASB 104 conditions as of the financial statement date.
• Document supporting evidence. Retain relevant decisions, sales activity, market information and approval requirements.
• Reconcile asset records. Compare capital asset balances with the General Ledger, review depreciation schedules and investigate differences before preparing financial statements.
• Prepare disclosure information. Gather historical cost, accumulated depreciation or amortization and applicable collateral-related debt amounts.
• Coordinate with departments. Confirm asset status with public works, facilities and other departments responsible for municipal property.
• Review existing financial statement notes. Determine whether the current capital asset presentation meets the new requirements.
• Address transition requirements. Review retroactive application where practicable, required adoption disclosures and any affected comparative information with your auditor.

How SmartFusion Supports Capital Asset Reporting Preparation

Preparing capital asset disclosures is easier when finance teams have reliable asset records and supporting accounting information.

SmartFusion's Fixed Assets module helps municipalities maintain asset records, calculate depreciation and track acquisitions, transfers and disposals. Finance teams can use reports such as the Asset Master Report and Depreciation Schedule to review information needed during financial statement preparation.

The Fixed Assets module also supports posting accounting activity to SmartFusion's Fund Ledger. Finance directors can use ledger reports, including the Trial Balance and Detailed Account Inquiry, when reviewing balances and investigating discrepancies.

These capabilities provide useful information for GASB 104 reporting preparation. Municipal finance staff and their auditors remain responsible for evaluating held-for-sale classifications and determining the required financial statement disclosures.

Preparing for GASB 104 Reporting

GASB 104 adds another reason to review capital asset information throughout the fiscal year. Keeping records current and documenting decisions about municipal property can reduce the amount of research required when financial statements are prepared.

Want to see how SmartFusion can support your capital asset management and financial reporting process?

Learn how SmartFusion's Fixed Assets and General Ledger tools help local governments maintain financial records and prepare information for reporting reviews.

References

• GASB Statement No. 104: Disclosure of Certain Capital Assets, Governmental Accounting Standards Board, September 2024.
• GASB 104: Disclosure of Certain Capital Assets, North Carolina Office of the State Controller.
• GASB Provides Guidance for Certain Capital Assets, Journal of Accountancy, October 2024.