FIACCT 09-17_00 Fixed Assets – Depreciation

Effective: March 16, 1998
Revised: July 2, 2001

Purpose

This policy defines the statewide policy and procedure for depreciation of fixed assets in accordance with Governmental Accounting Standard’s Board (GASB) statement 34 (GASB 34).

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Policy

A. All state owned fixed assets, including infrastructure, will be depreciated except for the following:
1. Land and inexhaustible improvements,

2. Utah Department of Transportation infrastructure reported under the “modified approach,” as defined in GASB 34.

3. Most works of Art and Historical Collections.
Works of Art and Historical Collections will not be depreciated if the following criteria are met and agencies keep an auditable, current, and detailed list of these assets. These types of assets do not need to be added to the Fixed Asset System. However, if they are already on the system they must remain on the system.

a. The assets are held for public exhibition, education, or research in furtherance of public service rather than financial gain,

b. The assets are protected, kept unencumbered, cared for, and preserved.

c. Are subject to an organizational policy that requires the proceeds from sales of collection items to be used to acquire other items for collections.

B. When agencies add depreciable assets to the FINET Fixed Assets system the following fields on the FA document must be populated:

Š Useful Life – See the FA – Standard Useful Life Table policy in this section of the manual for valid values.
Š In-Service Date – This is the date depreciation is to begin. For purchased assets it is generally the date the asset was received. For constructed assets it is the date the asset was put into service.
Š Depr Method – Enter SL for straight line. All state owned assets that are depreciable will be depreciated using the straight-line method.
Š Salvage Value – Enter the estimated dollar value of the asset at the end of its useful life.

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Background

Prior to fiscal year 2002, all governmental fund fixed assets on the FINET Fixed Asset System were recorded in fund 901, General Fixed Assets Accounting Group and these assets were not depreciated. However, beginning July 1, 2001, when GASB 34 was implemented, these assets were moved from fund 901 to the fund that purchased or owns the assets, such as the General Fund or Uniform School Fund. Also at June 30, 2001, State Finance ran the depreciation program, which calculated the beginning depreciated balance of fixed assets at July 1, 2001.

State Finance will run the depreciation program once a month. Depreciation (F1) entries will post to the general ledger as account type 24 and will not hit any expenditure budget tables. However, a debit to depreciation expense and a credit to accumulated depreciation will post to the general ledger and the depreciation expense will appear on FINET monthly expenditure reports. These account type 24 depreciation expenditures should not be used for budgeting purposes. Depreciation on federally funded equipment should not be charged back to a federal program.

Depreciation begins with the In-Service Date and continues throughout the asset’s useful life. In the last period of an asset’s useful life, the asset is depreciated to its salvage value. The asset will remain on FINET Fixed Assets as fully depreciated until it is disposed of and a FD document is processed by the agency. The FD will post appropriate entries to eliminate the accumulated depreciation and asset value. It will also post entries to record any gain or loss if the asset was sold.

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Procedures