Department Of Defense Agency Financial Report 2007 - Section 2: Financial Information Page 31
ADVERTISEMENT
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41
42
43
44
45
46
47
48
49
50
51
52
53
54
55
56
57
58
59
60
61
62
63
64
65
66
67
68
69
70
71
72
73
74
75
76
77
78
79
80
81
82Section 2: Financial Information
Department of Defense Agency Financial Report 2007
1.O. General Property, Plant and Equipment
The SFFAS No. 23, “Eliminating the Category National Defense Property, Plant, and Equipment,” established GAAP for
valuing and reporting military equipment (e.g., ships, aircraft, combat vehicles, weapons) in federal financial statements.
The Standard provided for the use of estimated historical cost for valuing military equipment if obtaining actual historical
cost information is not practical. The Department used the Bureau of Economic Analysis (BEA) estimation methodology to
calculate the value of the military equipment for reporting periods from October 1, 2002, through March 31, 2006.
Effective 3rd Quarter, FY 2006, the Department replaced the BEA estimation methodology with one based on departmental
internal records for military equipment. The Department identified the universe of military equipment by accumulating
information relating to program funding and associated military equipment, equipment useful life, program acquisitions, and
disposals to create a baseline. The military equipment baseline is updated using expenditure information and information
related to acquisitions and disposals.
In FY 2006, the Department revised the real property capitalization threshold from $100 thousand to $20 thousand.
The current $100 thousand capitalization threshold remains unchanged for the remaining General Property, Plant and
Equipment (PP&E) categories. Not all Military Departments have implemented this revised policy due to system and process
limitations. General PP&E assets are capitalized at historical acquisition cost plus capitalized improvements when an asset
has a useful life of two or more years and the acquisition cost equals or exceeds the Department’s capitalization threshold.
The Department also requires capitalization of improvement costs over the Department’s capitalization threshold. The
Department depreciates all General PP&E, other than land, on a straight-line basis.
Prior to FY 1996, General PP&E was capitalized if it had an acquisition cost of $15 thousand, $25 thousand, and $50
thousand for FYs 1993, 1994, and 1995 respectively, and an estimated useful life of two or more years. General PP&E
previously capitalized at amounts below $100 thousand was written off General Fund financial statements in FY 1998. No
adjustment was made for WCF assets that remain capitalized and reported on WCF financial statements.
The USACE Civil Works General PP&E is capitalized at historical acquisition cost plus capitalized improvements when
an asset has a useful life of two or more years and the acquisition cost exceeds $25 thousand. One exception is that all
buildings and structures related to hydropower projects are capitalized regardless of cost. Prior to FY 2004, the USACE
capitalized all buildings and structures regardless of cost. In FY 2003, the USACE increased the threshold (effective FY
2004) for buildings and structures to $25 thousand for all Civil Works appropriations with the exception of Revolving Fund
and Power Marketing Agency assets and expensed all previously acquired assets that did not meet the new $25 thousand
threshold.
When it is in the best interest of the government, the Department provides government property to contractors to complete
contract work. The Department either owns or leases such property, or it is purchased directly by the contractor for the
government based on contract terms. When the value of contractor-procured General PP&E exceeds the Department’s
capitalization threshold, federal accounting standards require that it be reported on the Department’s Balance Sheet.
The Department is developing new policies and a contractor reporting process for Government furnished equipment that
will provide appropriate General PP&E information for future financial statement reporting purposes. Accordingly, the
Department reports only government property in the possession of contractors that is maintained in the Department’s
property systems. The Department has issued new property accountability and reporting requirements for Department
entities to maintain, in their property systems, information on all property furnished to contractors. This action and other
proposed actions are structured to capture and report the information necessary for compliance with federal accounting
standards.
1.P. Advances and Prepayments
The Department’s policy is to record advances and prepayments in accordance with GAAP. As such, payments made
in advance of the receipt of goods and services are reported as assets on the Balance Sheet. The Department’s policy
is to expense or capitalize assets when the related goods and services are received. Not all Department entities have
implemented this policy primarily due to system limitations.
ADVERTISEMENT
0 votes
Related Articles
Related forms
Department Of Defense Child Development Program Request For Care Record Dd Form 2606 (jul 1998)
Business
Dd Form 1172-2 2007, Application For Department Of Defense Common Access Card Deers Enrollment
Business
Related Categories
Parent category: Business