Government-Wide Financial Statements
Capital assets are recorded as assets in the government-wide financial statements. (When an asset is referred to as being recorded, it means that the asset as well as accumulated depreciation and depreciation expense, if applicable, are also recorded.) The capital assets recorded in the government-wide financial statements include those used in governmental activities and those recorded for business-type activities. Capital assets relating to any fiduciary funds are not recorded in the governmentwide financial statements.
Fund Financial Statements
Capital assets are not current financial resources. Accordingly, they are not recorded in the governmental funds. When a governmental fund purchases or constructs a capital asset, it is recorded as an expenditure rather than as an asset. Capital assets relating to governmental activities are recorded only in the government wide financial statements.
Because proprietary funds record all economic resources, capital assets are recorded as assets in proprietary funds. When a proprietary fund purchases or constructs a capital asset, it is recorded
as an asset on its balance sheet. Of course, these capital assets also carry forward to be recorded in the government-wide financial statements.
Taken From : Governmental Accounting Made Easy