Effective Date: April 1, 2016
Applicable FAM Policies: 510 Tangible Capital Assets
Applicability: GNWT Departments and Public Agencies

INTERPRETATION

Department and public agencies are to ensure that only approved asset categories and estimated useful life options are used when recording a tangible capital asset (TCA).

The cost of a TCA used in providing a program or service is allocated to operations as an expense called “amortization” with an offsetting credit to accumulated amortization over its useful life. This reflects the full cost of government programs and services.

Amortization must be calculated and recorded on a monthly basis, on a straight line basis in accordance with the asset categories and related amortization periods set by the Comptroller General below.

Exception to classes and rates must be approved by the Comptroller General in advance.

When a TCA belongs to a category that offers a range of useful lives, departments shall determine the useful life in a rational and systematic manner, appropriate to the nature and use of the TCA, in consultation with responsible asset managers.

Asset managers should conduct periodic reviews of the estimate of the remaining useful life of a TCA to determine whether revisions are appropriate. A revision to a TCA’s estimated useful life is considered a change in estimate and is to be applied prospectively (i.e., no adjusting entries are made for prior periods).

Significant events that may indicate a need to revise the estimate of the remaining useful life of a TCA include: a material change to the extent and manner in which a TCA is used, the removal of a TCA from service for an extended period of time, physical damage, significant technological improvements, obsolescence, etc.