Norwalk, CT, July 10, 2007—The Governmental Accounting Standards Board (GASB) today issued Statement No. 51, Accounting and Financial Reporting for Intangible Assets. The Statement provides needed guidance regarding how to identify, account for, and report intangible assets.
The new standard characterizes an intangible asset as an asset that lacks physical substance, is nonfinancial in nature, and has an initial useful life extending beyond a single reporting period. Examples of intangible assets include easements, computer software, water rights, timber rights, patents, and trademarks.
Statement 51 requires that intangible assets be classified as capital assets (except for those explicitly excluded from the scope of the new standard, such as capital leases). Relevant authoritative guidance for capital assets should be applied to these intangible assets.
Statement 51 provides additional guidance that specifically addresses the unique nature of intangible assets, including:
“This standard should to lead to greater consistency among governments, particularly in the areas of recognition, initial measurement, and amortization,” said Robert Attmore, GASB chairman. “As a result, the usefulness of information provided to taxpayers, municipal bond analysts, and other users of state and local government financial statements will be enhanced.”
The requirements Statement 51 are effective for financial statements for periods beginning after June 15, 2009. The GASB made significant changes to the transition provisions, based on constituent response to the proposed version of the standards, to make it easier for governments to implement.
Constituent feedback also prompted the GASB to exclude from the scope of the standard intangible assets acquired or created primarily for the purpose of directly obtaining income or profit (for example, a patent that is donated to a governmental entity for the specified purpose of generating income for that entity).
Statement 51 (Product Code GS51) can be ordered through the GASB’s order department at 800-748-0659 or via its website at www.gasb.org.
About the Governmental Accounting Standards Board
The GASB is the independent, not-for-profit organization formed in 1984 that establishes and improves financial accounting and reporting standards for state and local governments. Its seven members are drawn from the Board's diverse constituency, including preparers and auditors of government financial statements, users of those statements and members of the academic community. More information about the GASB can be found at its website www.gasb.org.