Common Terminology

Each recording of a depreciation expense update is offset by a posting to an Accumulated Depreciation account.

An acquisition is the process of acquiring a new fixed asset at historical cost (that is, the original cost) by an entity. Entities will report an amount for fixed assets that equals the related fund expenditures incurred to purchase or construct the fixed asset. In cases where an asset is gifted, the historical cost is typically the current market value.

An asset that is worth less on the market than the value recorded is considered impaired. This will result in a write-down of that same asset account to the stated market price.

Adding value to an existing fixed asset due to improvements/additions made to the fixed asset.

A common acronym that stands for chart of accounts, which is used to refer to the collection of chart of account fields found in the Responsibility Center of Fixed Asset Headers or on the Accounting Line.

Composite assets consisting of multiple components are depreciated as single asset based on depreciation attributes established on the asset header. Individual sites policy will govern whether an asset should be defined as composite or not. Typical examples of composite assets are infrastructure assets such as highways, roads and bridges.

The allocation of the net costs of the fixed asset over its estimated useful life is accomplished by decreasing the value of an asset by the amount of this allocation (depreciation).

An asset is considered disposed when retired due to sale, destruction, obsolescence or vandalism, etc.

Government Accounting Standards Board

Generally Accepted Accounting Principles

The Historic Asset Cost represents the original amount at which the fixed asset was acquired. This amount is inclusive of subsequent acquisitions, betterments, and increase/decrease adjustments. It does not include depreciation and disposition. The amount is provided as information to show the original, gross cost of the asset.

The In Service Date specifies the date the asset entered into service. Depreciation can begin on this date or the Acquisition Date, which date is determined by the asset type.

Assets may be tracked as part of the asset inventory without any accounting impact with an indication that it is a Memo Asset. Memo Assets are often used to record assets that do not meet capitalization threshold requirements but should or must be tracked.

Net Book value is the difference between the historical asset and accumulated depreciation.

A term used for the type of asset modification where the location, custodian, responsible employee are updated.

The useful life of an asset is the estimated life, expressed in years, over which the asset will decrease with use or time to the point of equaling the salvage value, which could be zero.

An optional asset management tool is to maintain the current value of an asset, or valuation. When this amount is updated manually or by an application process, the term is revaluation.