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State of Louisiana
Office of Statewide Reporting and Accounting Policy

M. J. "Mike" Foster, Jr.

Mark C. Drennen
Commissioner of Administration

April 24, 2001


TO:  Fiscal Officers
All ISIS Agencies
FROM:  F. Howard Karlton,  CPA  
SUBJECT:  Statewide Guidelines for Capitalization and Depreciation of Capital Assets **MEMO HAS BEEN REVISED** See Revised Version Here

The Office of Statewide Reporting and Accounting Policy will be required to implement the Governmental Accounting Standards Board's Statement No. 34, "Basic Financial Statements - and Management's Discussion and Analysis - for State and Local Governments" for the fiscal year 2002 Comprehensive Annual Financial Report (CAFR). This new reporting model requires many changes to the current method of preparing the state's CAFR. One dramatic change will be the requirement to report capital assets (including infrastructure assets) and depreciation (including governmental funds assets) in the CAFR in the new government-wide financial statements. To assist the Office of Statewide Reporting and Accounting Policy in preparing for this major change, it will be important for each entity to become aware of the requirements and policies that have been set forth in the above subject area.

To assist entities in doing this, the Office of Statewide Reporting and Accounting Policy has developed and enclosed a guide for capitalization and depreciation of capital assets that establishes these requirements and policies. One of the policies is the change in capitalization threshold for movable property from $250.00 to $5000.00. This policy will require all movable property acquisitions over $5000.00 to be capitalized and depreciated instead of expensed in their budget categories.

For those agencies budgeted in the General Appropriations Act and who use the movable property inventory system under the Louisiana Property Assistance Agency (LPAA), the OSRAP will centrally compile the data and calculate the depreciation and accumulated depreciation amounts required for GASB 34 reporting using the straight line method. OSRAP will do the same thing for those buildings entered into the State Land and Building System (SLABS). All buildings owned by the state of Louisiana are included Fiscal Officers Page Two April 24, 2001 in this system. Agencies budgeted in the General Appropriations Act who use LPAA and SLABS will need only reflect the capitalization on their AFR. Instructions for this will be included in a June 30, 2002 edition of the AFR packet. Quite simply, for those agencies described in this paragraph, you will need only to reflect the capitalization of the movable property (not buildings) in the AFR by crediting expenditures and debiting movable property. OSRAP will also expand the chart of accounts so agencies may code directly those acquisitions which will be capitalized and those which will be expensed.

Entities not budgeted in the General Appropriations Act will have to capitalize and depreciate fixed assets using the straight-line method of depreciation and follow the policies outlined in the guide. The guide includes capital asset categories and descriptions, definitions, capitalization threshold levels, useful lives, and the chosen method of depreciation. Your responsibility for this reporting requirement is to follow the policies in the guide, and to report capital assets and the associated depreciation and accumulated depreciation in accordance with these policies. Should you have any questions concerning the above, contact Mr. Afranie Adomako at (225) 342-1091, Mr. Nelson Green at (225) 342-1090, Ms. Renee Withers at (225) 342-1089, Ms. Rae Marrero at (225) 342-0710, or me at (225) 342-0708.