ASTM E2378-19
(Practice)Standard Practice for the Recognition of Impaired or Retired Property Assets
Standard Practice for the Recognition of Impaired or Retired Property Assets
SIGNIFICANCE AND USE
5.1 Asset management activities should be worthwhile; the perceived benefits should exceed the perceived cost of those benefits. As time progresses, property accountability processes may need to be adjusted with proper recognition to maintain the required framework of internal controls and to avoid abuse. Systematic depreciation of property generally serves to provide a fair presentation of an entity’s property and financial records for decision makers. When conditions change, proper recognition should also occur such as impairments or abandonments. The accountability approach of some items may increase, and accountability approach of other items decrease. Keeping fully depreciated items on the asset records and property management records when they no longer are used as originally intended may be misleading to decision makers and may result in excessive operating costs. Retiring items to administrative control, when appropriate, improves the efficiency and lowers administrative cost without sacrificing other worthwhile internal controls.
SCOPE
1.1 This practice covers guidance as to the proper treatment for accounting and accountability purposes when items are still retained but need to be recognized as impaired or retired to administrative control. This practice is intended to be used in conjunction with Practice E2279, which provides various principles to improve the effectiveness and efficiency of the property management functions. These include the concepts of materiality, best value, reasonable detail, and reasonable assurance and proper reporting. During the life cycle of property management, appropriate action must be taken at the appropriate time to be in conformance with these principles. The objective, on behalf of the owner, is to maintain property accounting records that adequately represent the appropriate book value of the property and for accountability purposes apply the appropriate management and oversight for the proper protection and safeguarding of assets.
1.2 This practice covers the recognition of the status of property assets that is critical to a fair representation of the entity’s property and financial records. For instances, when items for accounting or property management purposes may no longer serve the purpose that was originally intended, it may be more appropriate to recognize impairments or retire these items for record keeping purposes.
1.3 Generally, entities for internal controls purposes record, account, and inventory property that meet certain criteria, as defined by the organization, based upon acquisition cost thresholds, expendability, or useful life policies. Accordingly, entities should establish recurring depreciation cycles so that the property eligible for depreciation is fairly and consistently recorded in the entity’s records in accordance with generally accepted accounting principles.
1.4 The percentage or extent of recognized depreciation is dependent on such factors as the nature of owned property, its useful life, and the frequency of property used in support of business-type activities of the entity.
1.5 This practice covers the accepted practice of proper record keeping actions when items are fully depreciated for accounting purposes and should be retired from the accounting as well as property management purposes when the asset no longer serves the purpose that was intended but remains on the entity’s premises or continues to be under some form of control.
1.6 Entities have a responsibility under their internal controls to operate effectively, efficiently, and in a reasonable and responsible manner to provide stakeholders best value as provided in public law, regulations, and generally accepted accounting practices. These responsibilities include responding to internally and externally imposed accounting and accountability changes.
1.7 This standard acknowledges during the life cycle of assets, decisions have to be mad...
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This international standard was developed in accordance with internationally recognized principles on standardization established in the Decision on Principles for the
Development of International Standards, Guides and Recommendations issued by the World Trade Organization Technical Barriers to Trade (TBT) Committee.
Designation: E2378 − 19
Standard Practice for
1
the Recognition of Impaired or Retired Property Assets
This standard is issued under the fixed designation E2378; the number immediately following the designation indicates the year of
original adoption or, in the case of revision, the year of last revision. A number in parentheses indicates the year of last reapproval. A
superscript epsilon (´) indicates an editorial change since the last revision or reapproval.
1. Scope 1.5 This practice covers the accepted practice of proper
record keeping actions when items are fully depreciated for
1.1 This practice covers guidance as to the proper treatment
accounting purposes and should be retired from the accounting
for accounting and accountability purposes when items are still
as well as property management purposes when the asset no
retained but need to be recognized as impaired or retired to
longer serves the purpose that was intended but remains on the
administrative control. This practice is intended to be used in
entity’s premises or continues to be under some form of
conjunction with Practice E2279, which provides various
control.
principles to improve the effectiveness and efficiency of the
property management functions. These include the concepts of 1.6 Entities have a responsibility under their internal con-
materiality, best value, reasonable detail, and reasonable assur- trols to operate effectively, efficiently, and in a reasonable and
ance and proper reporting. During the life cycle of property responsible manner to provide stakeholders best value as
management, appropriate action must be taken at the appropri- provided in public law, regulations, and generally accepted
ate time to be in conformance with these principles. The accounting practices.These responsibilities include responding
objective, on behalf of the owner, is to maintain property to internally and externally imposed accounting and account-
accounting records that adequately represent the appropriate ability changes.
book value of the property and for accountability purposes
1.7 This standard acknowledges during the life cycle of
apply the appropriate management and oversight for the proper
assets, decisions have to be made regarding the fair represen-
protection and safeguarding of assets.
tation of assets and they are what they are purported to be for
1.2 This practice covers the recognition of the status of accounting and operational purposes. Concurrently, asset man-
property assets that is critical to a fair representation of the agement operations include adequate internal controls includ-
entity’s property and financial records. For instances, when ing items being managed effectively and efficiently, which
itemsforaccountingorpropertymanagementpurposesmayno includes considerations of materiality.
longerservethepurposethatwasoriginallyintended,itmaybe
1.8 This standard is limited to property asset management
moreappropriatetorecognizeimpairmentsorretiretheseitems
functions. This standard does not purport to address tax
for record keeping purposes.
concerns, if any, associated with its use. It is the responsibility
1.3 Generally, entities for internal controls purposes record, of the user of this standard to establish appropriate internal tax
account, and inventory property that meet certain criteria, as guidelines and to determine the applicability of regulatory or
defined by the organization, based upon acquisition cost statutory requirements prior to use.
thresholds, expendability, or useful life policies. Accordingly,
1.9 This international standard was developed in accor-
entities should establish recurring depreciation cycles so that
dance with internationally recognized principles on standard-
the property eligible for depreciation is fairly and consistently
ization established in the Decision on Principles for the
recorded in the entity’s records in accordance with generally
Development of International Standards, Guides and Recom-
accepted accounting principles.
mendations issued by the World Trade Organization Technical
Barriers to Trade (TBT) Committee.
1.4 The percentage or extent of recognized depreciation is
dependent on such factors as the nature of owned property, its
2. Referenced Documents
useful life, and the frequency of property used in support of
2
business-type activities of the entity.
2.1 ASTM Standards:
E2135 Terminology for Property and Asset Management
1
This practice is under the jurisdiction of ASTM Committee E53 on Asset
Management and is the direct responsibility of Subcommittee E53.03 on Financial
2
Management. For referenced ASTM standards, visit the ASTM website, www.astm.org, or
Current e
...
This document is not an ASTM standard and is intended only to provide the user of an ASTM standard an indication of what changes have been made to the previous version. Because
it may not be technically possible to adequately depict all changes accurately, ASTM recommends that users consult prior editions as appropriate. In all cases only the current version
of the standard as published by ASTM is to be considered the official document.
Designation: E2378 − 13 E2378 − 19
Standard Practice for
the Recognition of Impaired or Retired Personal
1
PropertyProperty Assets
This standard is issued under the fixed designation E2378; the number immediately following the designation indicates the year of
original adoption or, in the case of revision, the year of last revision. A number in parentheses indicates the year of last reapproval. A
superscript epsilon (´) indicates an editorial change since the last revision or reapproval.
1. Scope
1.1 This practice covers guidance as to the proper treatment for accounting and accountability purposes when items are still
retained,retained but need to be recognized as impaired or retired to administrative control. This practice is intended to be used
in conjunction with Practice E2279, which provides various principles to improve the effectiveness and efficiency of the property
management functions. These include the concepts of materiality, best value, reasonable detail, and reasonable assurance and
proper reporting. During the life cycle of property management, appropriate action must be taken at the appropriate time to be in
conformance with these principles. The objective, on behalf of the owner, is to maintain property accounting records that
adequately represent the actual appropriate book value of the property and for accountability purposes apply the appropriate
management and oversight.oversight for the proper protection and safeguarding of assets.
1.2 This practice covers the recognition of depreciation the status of personal property assets that is critical to a fair
representation of the entity’s property and financial records. For instances, when items for accounting or property management
purposes may no longer serve the purpose that was originally intended, it may be more appropriate to recognize impairments or
retire these items for record keeping purposes.
1.3 Generally, entities formally for internal controls purposes record, account, and inventory personal property that meet certain
criteria, as defined by the entity,organization, based upon acquisition cost thresholds, expendability, or useful life policies.
Accordingly, entities should establish recurring depreciation cycles so that the property eligible for depreciation is fairly and
consistently recorded in the entity’s records in accordance with generally accepted accounting principles.
1.4 The percentage and frequencyor extent of recognized depreciation is dependent on such factors as the nature of owned
property, its useful life, and the frequency of property useused in support of business-type activities of the entity.
1.5 This practice covers the accepted practice of proper record keeping actions when items are fully depreciated for accounting
purposes and should be retired from the accounting as well as property management purposes when the asset no longer serves the
purpose that was intended but still remains on the entitiesentity’s premises or continues to be under some form of control.
1.6 Entities have a responsibility under their internal controls to operate effectively, efficiently, and in a reasonable and
responsible manner to provide stakeholders best value as provided in public law, regulations, and generally accepted accounting
practices. These responsibilities include responding to internally and externally imposed accounting and accountability changes.
1.7 This standard acknowledges during the life cycle of assets, decisions have to be made regarding the fair representation of
assets and they are what they are purported to be for accounting and operational purposes. Concurrently, asset management
operations include adequate internal controls including items being managed effectively and efficiently, which includes
considerations of materiality.
1.8 This standard is limited to property asset management functions. This standard does not purport to address tax concerns,
if any, associated with its use. It is the responsibility of the user of this standard to establish appropriate internal tax guidelines
and to determine the applicability of regulatory or statutory requirements prior to use.
1.9 This international standard was developed in accordance with internationally recognized principles on standardization
established in the Decision on Principles for the Development of International Standards, Guides and Recommendations issued
by the World Trade Organization Technical Barriers to Trade (TBT) Committee.
1
This practice is under the jurisdiction of ASTM Committee E53 on Asset Management an
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