GASB 104: New Disclosure Requirements for Certain Capital Assets

Clear capital asset reporting matters more as governments own and use a wider range of assets. GASB Statement No. 104, Disclosure of Certain Capital Assets, was issued in September 2024 to improve the usefulness of capital asset reporting. It gives users of government financial statements important information about specific kinds of capital assets and promotes transparency and consistency in reporting.

GASB 104 requires certain types of capital assets to be presented separately within the capital asset note disclosures already required. The affected categories include lease assets, public-private and public-public partnership assets, subscription-based information technology arrangements, and capital assets held for sale.

GASB issued statement 104 to improvecapital asset disclosure transparency. For about a quarter century, GASB 34 was the primary source of guidance on capital asset disclosures. Later statements added intangible right-to-use assets, which are considered capital assets. GASB 104 responds to inconsistent practices that developed after those statements were issued.

The statement also helps to increase visibility into certain categories of capital assets. Lease and subscription assets have become more common, and broader capital asset totals can hide them. Separate disclosure gives readers a clearer view of what a government owns, what it uses under agreements, and what it plans to sell.

GASB 104 is a narrow statement with a focused set of requirements. Its changes fall into two groups: separate disclosure of certain asset types that governments already report as capital assets, and added disclosure for assets a government intends to sell.

A right-to-use asset represents a government’s right to use something it doesn’t own. Think of a government that leases a building or vehicles, or that pays for software under a multiyear contract. The government doesn’t hold title, but accounting rules treat the right to use the item for the contract term as a capital asset.

GASB 104 requires governments to present separate disclosures within the capital assets footnote for lease assets, intangible right-to-use assets recognized under GASB 94, subscription assets, and other intangible assets that don’t fall into those categories, such as easements, software, or water rights. Right-to-use assets may not be shown in the same major class as owned assets of the same type.

The separate disclosure extends to the related amortization. The statement requires these types of capital assets and their related amortization to be disclosed separately in the capital asset note. A leased asset and its accumulated amortization therefore no longer disappear into totals for owned assets.

The practical result is that a reader can tell the difference between assets the government owns and assets it has the right to use under a lease, subscription arrangement, or similar agreement.

GASB 104 introduces a new type of capital asset, a capital asset held for sale, and sets specific criteria for it. An asset qualifies only when both of two conditions are met:

For capital assets held for sale, governments disclose the ending balance, with separate disclosure of historical cost and accumulated depreciation (or amortization) by major class of asset. The requirements apply to both governmental and business-type activities, which may mean more detail in the capital assets note than in prior years.

Governments must also disclose the carrying amount of debt for which the assets held for sale are pledged as collateral, for each major class of asset. That tells readers whether lenders have a claim on assets that are about to leave the government’s books.

GASB 104 leaves the accounting for capital assets where it was. The provisions are limited to the disclosure of certain types of capital assets and do not change current recognition or measurement requirements.

Assets continue to be reported at historical cost less accumulated depreciation. A capital asset held for sale continues to be reported within its appropriate major class of capital asset, such as buildings or equipment, rather than moving to a new category.

GASB 104 is effective for fiscal years beginning after June 15, 2025, and it requires retroactive application. The requirements are applied to all periods presented in the basic financial statements, if practicable, and a government must disclose that it implemented the statement and any financial statement line items (excluding totals and subtotals) affected. If applying it to prior periods isn’t practicable, the government must disclose the reason it did not apply the statement to those periods.

The standard isn’t meant to be easy to opt out of. GASB states that reasonable efforts should be employed before a government determines that restating all prior periods presented is not practicable. Governments should therefore try to restate prior periods first and treat a conclusion of impracticability as a last resort.

The effort for a disclosure standard falls on the records behind the notes.

Ask whether any capital assets meet the two-part test for assets held for sale. Check who is responsible for flagging held-for-sale candidates and how that information reaches the accounting office. The capital asset schedule should contain enough detail to identify which assets are held for sale, along with their historical cost and accumulated depreciation or amortization, by major class.

Each category of right-to-use asset has its own disclosure requirement, so it helps to review them one at a time.

For existing disclosure templates, revise the capital asset note and roll-forward so leased assets, subscription assets, and other right-to-use assets appear separately, organized by major class of underlying asset, rather than combined with other asset types. Add the held-for-sale disclosures: ending balance, historical cost and accumulated depreciation by major class, and the carrying amount of related collateralized debt. Also include the statement that GASB 104 was implemented and any affected line items.

Keep support for each judgment: why an asset was or was not treated as held for sale, how right-to-use assets were classified, and, if applicable, why restating a prior period wasn’t practicable. That support will be useful during the audit.

GASB 104 is a narrow statement, and for many governments the practical impact will be modest. The main reason is that the information it asks for is largely already being tracked. The statement is also limited to disclosure. What changes is how information is grouped and labeled in the capital asset note.

So for many governments, the work is about the notes and the schedules behind them, not about operations. The changes are more likely to involve adjusting templates, grouping categories differently, and documenting judgments than redesigning systems or processes.

A CPA firm can help governmental clients evaluate the impact of GASB 104 and prepare for implementation through practical guidance, disclosure examples, and financial statement reporting support.

Have questions about how to implement GASB 104? Talk to our team.