What Is GASB 51?March 20, 2012 — 1,114 views
Government agencies and organizations often possess many different resources that can be considered intangible assets. These properties were defined in GASB 34, which in effect created a divide over when intangible assets should be classified as capital assets for financial reporting purposes.
That lack of guidance prompted the Government Accounting Standards Board (GASB) to draft a new statement to standardize the accounting and reporting of intangible assets among state and local governments. The agency implemented GASB 51 to reduce inconsistencies and provide further guidance for government departments. The statement requires all intangible assets to be classified as capital assets and addresses the nature of these properties.
GASB 51 defines that an intangible asset only be recognized in any statement of net assets if it is considered identifiable. Therefore, outlays associated with the creation and use of these properties should not be capitalized until specific criteria are met. For example, outlays incurred before meeting these specifications should be recorded as incurred.
The statement offers guidance to governments that were unsure how to determine the useful life of intangible assets, especially when the length of their life is contractually limited. If there are no limiting factors related to a particular asset, GASB 51 states that the intangible asset should be viewed as having an indefinite useful life, and as such not be amortized unless there is a change in circumstances.