Only prospective reporting of the infrastructure is required during the first four years after the effective date of this statement. For periods beginning after June 15, 2005, infrastructure assets that were (a) purchased, constructed, or donated after June 30, 1980, or (b) received major renovations, restorations, or improvements since June 30, 1980 are to be included in the basic financial statements.

Government-Wide Reporting
What is the government-wide perspective? It is a way of looking at a primary governmental entity using the economic resources measurement focus and full accrual basis of accounting as a whole unit rather than a group of separately operated funds. Essentially, a government-wide perspective somewhat conforms a governmental entity's financial reports to those used in the private sector.

Capital Assets
Why report capital assets? Capital assets are assets that have useful lives extending beyond a single reporting period. Because of this, a more accurate reflection of economic change from period to period is achieved by recording the improved economic position of the entity when the asset is acquired and then the subsequent deterioration of that economic position as the asset resource is "used up". (See discussion below on depreciation expense.)

Under the new accounting rules required by the new reporting model, all capital assets, tangible as well as intangible, of a governmental entity will be reported at the government-wide perspective in the Statement of Net Assets at historical cost (or estimated historical cost) less accumulated depreciation. Capital assets include, but are not limited to the following:

• Land and Land Improvements
  
• Easements
  
• Buildings and Building Improvements
  
• Vehicles
  
• Machinery
  
• Equipment
  
• Infrastructure

Under the new reporting requirements, the old General Fixed Asset Account Group is no longer used for general-purpose external financial reports.

The policies used for capitalizing assets and for estimating the useful lives of those assets should be disclosed in the summary of significant accounting policies section of the Notes to the Financial Statements. Other information required about capital assets includes a basic roll-forward schedule including:

• Current- and prior-year cost balances
  
• Capital acquisitions
  
• Sales or other dispositions
  
• Current- and prior-year accumulated depreciation balances
  
• Current-period depreciation expense

Next week, we will examine the reporting of depreciation expense, and discuss why governmental entities must include infrastructure assets in the capital asset categories.