All governments are now required to report general infrastructure capital assets prospectively. Retroactive capitalization of major infrastructure assets required by GASBS 34 becomes more complicated. Governments with total annual revenues of less than $10 million do not have to retroactively record infrastructure assets, although they are encouraged to do so. The determination of major infrastructure assets is made at the network or subsystem level as follows:

• The cost or estimated cost of a subsystem is expected to be at least 5% of the total cost of all general capital assets reported in the first fiscal year ending after June 30, 1999.
• The cost or estimated cost of a network is expected to be at least 10% of the total cost of all general capital assets reported in the first fiscal year ending after June 15, 1999.

In adopting the new financial reporting model, the GASB knew there would be a significant amount of time and effort involved in retroactively capitalizing infrastructure assets. To minimize the cost and efforts to governments, several accommodations were made. First, governments with less than $10
million in annual revenues were exempted from the retroactive capitalization requirement. (Note importantly that these smaller governments still need to capitalize infrastructure assets going
forward.) Statement No. 34 of the GASB also provides the medium- and larger-sized governments with an additional three years to implement the retroactive infrastructure requirements from the time that GASBS 34 itself was required to be implemented.Finally, the percentage thresholds listed above that are used to determine “major” capital assets were intended to enable governments to retroactively capitalize only the more significant infrastructure assets. Governments did not have to attempt to retroactively capitalize insignificant infrastructure assets.

Taken From : Governmental Accounting Made Easy

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