Comptroller Fiscal Year Memo Letter Head


To:Chief Fiscal Officers and GAAP Liaisons
From:Martin J. Benison, Comptroller
Date:April 5, 2010
Re:GASB Statement No. 51 Implementation - Accounting and Financial Reporting for Intangible Assets

Comptroller Memo

Executive Summary

The Comptroller's Office (CTR) is distributing a questionnaire to state agencies relating to the implementation of the Governmental Accounting Standards Board Statement No. 51, (GASB 51) Accounting and Financial Reporting for Intangible Assets.

Please make sure the information in this memo is conveyed to relevant staff in your department.


Beginning in fiscal 2010 (as of July 1, 2009), the Commonwealth is required to implement the requirements of GASB 51. To prepare for this implementation, the Financial Reporting and Analysis Bureau is surveying agencies and institutions of higher education to identify intangible assets (e.g., patents, copyrights, trademarks; easements and local use rights; computer software - purchased or licensed, or internally generated) that will be included in their annual financial reports and the 2010 Comprehensive Annual Financial Report (CAFR) of the Commonwealth. The survey is posted on the PartnerNet website set up by our office.

Reporting Requirements

All agencies and institutions must complete the electronic questionnaire located in the General Outbound (Common Access) section of PartnerNet by Friday, April 23, 2010. The questionnaire must be submitted electronically by uploading it to CTR's General Inbound Box on PartnerNet:. Instructions for utilizing Partnernet are attached.

All CFOs and GAAP Liaisons have access to upload the questionnaire form to PartnerNet. CFOs can designate other department personnel to upload the Inventory Confirmation Form on PartnerNet. Department Security Officers can request access for additional users by submitting a PartnerNet Security request form doc format of pn_req_frm.doc
. Individuals needing access to PartnerNet to upload the form will be processed as soon as possible.

Your submission of the questionnaire is an acknowledgment that you have reviewed your agency's operations for potential intangible assets.

Summary of the Requirements of the Statement

GASB issued Statement No 51 - Accounting and Financial Reporting for Intangible Assets in June 2007. GASB 51 defines intangible assets as assets that possess all of the following characteristics:

  1. Lack of physical substance
  2. Non-financial nature
  3. Initial useful life extending beyond a single reporting period.

Examples are: patents, copyrights, trademarks; easements and local use rights; computer software (purchased or licensed, or internally generated)

GASB 51 establishes standards of accounting and financial reporting for qualifying intangible assets. Intangible assets must be classified and reported as capital assets . However, the scope of the document excludes:

  • Intangible assets acquired or created primarily to generate income or profit
  • Capital leases

For the Commonwealth, the requirements of GASB 51 are effective for financial statements of fiscal year 2010. Intangible Assets that are in use should be measured for historical cost if they are still in use and were created or acquired on or after July 1, 1980. This means that if your department/ agency has an intangible asset that is still in use that was created or acquired from FY1981 forward, it needs to be included in this survey. We will use this information to restate the Commonwealth's net assets in the FY2010 Comprehensive Annual Financial Report.

Recognition and Classification of Intangible Assets

GASB 51 establishes a framework for the recognition and classification of intangible assets and requires an intangible asset be only recognized if it is identifiable - when either of the following conditions is met:

  1. The asset is separable from the Commonwealth (i.e., capable of being separated and sold, transferred, licensed, etc.), or
  2. The asset arises from contractual or other legal rights, regardless of whether rights are separable.

The statement defines Internally Generated Intangible Assets ( IGIA) as created or produced by the Commonwealth or an entity contracted by the Commonwealth, or if they are acquired from a third party and require more than minimal incremental effort to achieve expected service capacity. Since 2004, the Commonwealth's Capital Asset Acquisition Policy doc format of po_fa_acctg_mangt_policy.doc
has required computer software to be recorded as a capital asset. GASB 51 amends that policy as it requires capitalization of IGIA costs only when all three criteria are met:

  1. Specific objective for project determined, including establishment of expected service capacity upon completion
  2. Demonstration of technical or technological feasibility for completing the project
  3. Demonstration of current intention, ability, and presence of effort to complete the project, or in the case of multiyear project, continue development if the intangible asset.

Only outlays incurred subsequent to meeting the above criteria should be capitalized. Outlay incurred prior to meeting those criteria should be expensed as incurred. Specifically, three phases occur in IGIA:




  • Determination of objective of project and is feasible
  • Demonstration that intent is there to complete the project
  • Management authorizes and commits to funding (e.g. ANF releases capital cap)
  • Software is coded, tested and implemented
  • Software is accepted and operating




This may cause a change in IGIA that is currently on MMARS. If it does, please notify CTR's financial reporting and analysis bureau immediately.

Should IGIA become obsolete or be upgraded, all current acquisition and management policies apply. Please refer to the various CTR policies on the Capital (fixed) asset section page. In addition, a common indicator of impairment for internally generated intangible assets is development stoppage, such as stoppage of development of computer software due to a change in the priorities of management. IGIA impaired from development stoppage should be reported at the lower of carrying value or fair value.

Specific Amortization Issues

Generally, intangibles with defined useful lives are being amortized over their useful life. Amortization is not required for intangibles with indefinite useful lives, i.e. when there are no factors that limit useful life.

CTR will contact you for the above information should your agency answer the questionnaire with a "yes" answer.

Contacts and References

Any questions concerning the contents of this memorandum should be directed to the CTR Help Desk.


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