Capital Asset - Annual Depreciation (Government-Wide Statements Only)
Recording annual straight-line depreciation on government capital assets in the government-wide statements — an entry that does NOT appear in the governmental fund financial statements.
| Account Name | Type | Debit ($) | Credit ($) |
|---|---|---|---|
| Depreciation Expense - General Government | Expense (+) | 18,000.00 | - |
| Accumulated Depreciation - Equipment | Asset (-) | - | 18,000.00 |
💡 Accountant's Note
Depreciation in government accounting only appears in the government-wide statements (full accrual basis). The governmental fund statements (modified accrual) have NO depreciation — assets are expensed at acquisition. For a $180,000 vehicle with a 10-year life: annual depreciation = $18,000. This creates a permanent reconciling difference: the government-wide Statement of Activities will show lower net position than the sum of governmental fund balances, because accumulated depreciation reduces net position but not fund balance.
Practitioner & Systems Framework
💻 ERP Architecture
The fixed asset module calculates and posts depreciation automatically in the government-wide ledger only. Ensure the depreciation module is configured with the government's capitalization and useful life policies by asset class. GASB 34 requires disclosure of useful lives by asset class in the capital asset note.
⚠️ Audit Flags
Auditors recalculate depreciation for a sample of capital assets and agree to the government-wide statements. Common errors: using incorrect useful lives, failing to take a half-year convention for new additions, continuing to depreciate fully depreciated assets. Assets disposed of without removing accumulated depreciation overstate both gross assets and accumulated depreciation.
📄 Required Documentation
Fixed asset register with useful life and acquisition date, depreciation schedule by asset class, capital asset note roll-forward (beginning balance + additions - disposals = ending balance for both cost and accumulated depreciation).
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