ExpertMedium1 markMultiple Choice
CPA · Question 49 · Area 3: Technical Accounting and Reporting
Under GASB standards for government-wide financial statements, how are infrastructure assets (roads, bridges) reported?
Under GASB standards for government-wide financial statements, how are infrastructure assets (roads, bridges) reported?
Answer options:
A.
They are expensed immediately.
B.
They are capitalized but never depreciated.
C.
They are capitalized and depreciated, unless the Modified Approach is adopted.
D.
They are not reported.
How to approach this question
General Rule: Capitalize and Depreciate. Exception: Modified Approach (Capitalize, don't depreciate, but expense maintenance).
Full Answer
C.They are capitalized and depreciated, unless the Modified Approach is adopted.✓ Correct
C
GASB 34 requires infrastructure to be capitalized. It must be depreciated unless the government adopts the 'Modified Approach', which requires demonstrating that assets are preserved at a specified condition level.
Common mistakes
Thinking governments don't capitalize assets (they do in the government-wide statements).
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