1、Designation: E 2378 05Standard Practice forthe Recognition of Impaired or Retired Personal Property1This standard is issued under the fixed designation E 2378; the number immediately following the designation indicates the year oforiginal adoption or, in the case of revision, the year of last revisi
2、on. A number in parentheses indicates the year of last reapproval. Asuperscript epsilon (e) indicates an editorial change since the last revision or reapproval.1. Scope1.1 This practice covers guidance as to the proper treatmentwhen items are still retained, but need to be recognized asimpaired or r
3、etired to administrative control. This practice isintended to be used in conjunction with Practice E 2279, whichprovides various principles to improve the effectiveness andefficiency of the property management functions including theconcepts of materiality, best value, reasonable detail, andreasonab
4、le assurance. During the life cycle of property man-agement, appropriate action must be taken at the appropriatetime to be in conformance with these principles. The objectiveis to maintain property accounting records that represent theactual value of property.1.2 This practice covers the recognition
5、 of depreciation ofpersonal property that is critical to a fair representation of theentitys property and financial records. For instances whenitems for accounting or property management purposes may nolonger serve the purpose that was originally intended, it may bemore appropriate to recognize impa
6、irments or retire these itemsfor record keeping purposes.1.3 Generally, entities formally record, account, and inven-tory personal property that meet certain criteria, as defined bythe entity, based upon acquisition cost thresholds, expendabil-ity, or useful life polices. Accordingly, entities shoul
7、d establishrecurring depreciation cycles so that the property eligible fordepreciation is fairly and consistently recorded in an entitysrecords in accordance with generally accepted accountingstandards.1.4 The percentage and frequency of depreciation is depen-dent on such factors as the nature of ow
8、ned property, its usefullife, and the frequency of property use in support of business-type activities of the entity.1.5 This standard covers accepted practice as to properrecord keeping actions when items are fully depreciated foraccounting purposes and should be retired from the accountingas well
9、as property management purposes when the asset nolonger serves the purpose that was intended but still remains onthe entities premises or continues to be under some form ofcontrol.1.6 Entities have a responsibility to operate effectively,efficiently, and in a reasonable and responsible manner and to
10、provide stakeholders best value as provided in public law,regulations and generally accepted accounting practices.1.7 This standard is limited to property management func-tions. This standard does not purport to address tax concerns,if any, associated with its use. It is the responsibility of the us
11、erof this standard to establish appropriate tax guidelines and todetermine the applicability of regulatory or statutory require-ments prior to use.2. Referenced Documents2.1 ASTM Standards:2E 2135 Terminology for Property and Asset ManagementE 2219 Practice for Valuation and Management of Move-able,
12、 Durable PropertyE 2279 Practice for the Guiding Principles of PropertyManagement3. Terminology3.1 Definitions: For definitions relating to Property andAsset Management, refer to Terminology E 2135.3.2 Terms Specific to This Standard3.2.1 administratively controlled items, nitems not requir-ing form
13、al property control and accountability by propertymanagement and accounting functions.4. Summary of Practice4.1 Entities should implement property management sys-tems in accordance with Practice E 2279.4.2 Property recorded in the entitys formal property systemshould be depreciated based upon intern
14、al or external stan-dards.4.3 The net book value of items should be fairly representedand this includes the recognition of impairments as they occur.Property management personnel have a vital role in the processof recognition of impairments.4.4 Because the actual drop in value of each asset may bedi
15、fficult and time-consuming to compute, a standardized de-preciation process may be used by entities to approximate1This practice is under the jurisdiction of ASTM Committee E53 on PropertyManagement Systems and is the direct responsibility of Subcommittee E53.03 onFinancial Management.Current editio
16、n approved July 1, 2005. Published July 2005.2For referenced ASTM standards, visit the ASTM website, www.astm.org, orcontact ASTM Customer Service at serviceastm.org. For Annual Book of ASTMStandards volume information, refer to the standards Document Summary page onthe ASTM website.1Copyright ASTM
17、International, 100 Barr Harbor Drive, PO Box C700, West Conshohocken, PA 19428-2959, United States.depreciations. For example, one process assumes that an assetdepreciates by an equal percentage of its original acquisitionvalue for each year that it is used resulting in the samededuction amount ever
18、y year. Another process may assumethat an asset depreciates at a larger rate in the first years and amuch smaller depreciation in later years.4.5 Irrespective of the depreciation method used, deprecia-tion at some time stops. At this point, unless the item isidentified as a sensitive item or perpetu
19、al control is necessaryfor other reasons, the status of the item may change from anaccountable to an administratively controlled item. If noaccountability threshold is used by the organization, deprecia-tion and accountability may continue at the discretion of theorganization. This is especially app
20、ropriate when there hasbeen a change in accounting or property management thresh-olds, the item no longer serves the purpose as originallyintended (it is retained for purposes or causes such as salvage,standby, incidental use, unreasonable removal cost, and soforth) or operating cost (record keeping
21、, insurance cost, inven-tory cost, and maintenance cost, and so forth) exceed theprobable future benefits provided by the item. Identificationtags may or may not be required to be removed fromadministratively controlled items, as determined by manage-ment.4.6 Asset management and other personnel wit
22、h operatingknowledge of assets shall assist owners, management, andaccounting functions in the identification of impaired items perentity policies.5. Significance and Use5.1 Systematic depreciation of property generally serves toprovide a fair presentation of an entitys property and financialrecords
23、 for decision makers. Keeping fully depreciated itemson the asset records and property management records whenthey no longer are used as originally intended may be mislead-ing to decision makers and may result in excessive operatingcost. Retiring items to administrative control when appropriateimpro
24、ves the efficiency, lowers operating cost without signifi-cantly reducing internal controls.6. Recognition of Impaired or Retired Personal Property6.1 An entity has the discretion to set appropriate account-ability or capitalization thresholds or both based on factorsunique to the entity.6.2 Acquire
25、d property that is valued above an entitysaccountability threshold and, if applicable, sensitive property,should be recorded to the organizations formal propertyaccountability system. At the time of recordation, the recordedvalue of procured property is usually based on its originalacquisition value
26、 (OAV). The OAV, although useful data thatshould be retained in the formal property records through thelife of the asset, should not be used as the sole value whenaccounting, reporting, and reconciling inventory results. Prop-erty acquired via means other than procurement is usuallyrecorded at a val
27、ue based on its fair market value. Mostproperty assets will lose value over time because of wear andtear, or other factors. Periodic depreciation takes into accountall of these factors.6.3 Generally, property recorded to a formal property ac-countability system is controlled and inventoried for as l
28、ong asthe property remains on the entitys property system. Propertyis periodically dropped from an entitys formal records as aresult of such actions as transfers, losses, consumption, disas-sembly, and, for the purpose of this practice, depreciation.6.4 Entities should only expend time and resources
29、 tocontrol and inventory property that supports the mission of theorganization or for other factors important to the owning entity.To accomplish this, a procedure should be established to assesseach property item recorded on a formal property systemperiodically to ensure that values are adjusted bas
30、ed on suchfactors as depreciation and, if warranted, appreciation.6.5 The percentage and frequency of property depreciationis at the discretion of an entity and based primarily on theimportance of the property item to the mission of the organi-zation.6.6 Practice E 2219 defines three types of proper
31、ty that anorganization may own:6.6.1 Type Aproperty anticipated to be necessary to gen-erate profit or accomplish an entitys mission,6.6.2 Type Bproperty not anticipated to be necessary togenerate profit or accomplish a mission, and6.6.3 Type Cproperty that poses a potential safety orenvironmental h
32、azard.6.7 Accordingly, for Type B property, an entity may elect toinitiate an across-the-board fixed annual depreciation rate,whereas Types A and C property that are directly associatedwith profit generation or mission success may be depreciatedless frequently and at a lower rate. Sensitive property
33、, asdefined by an entity, is depreciated but may remain on theformal property records because of safety or security concerns.6.8 The process of depreciation will eventually result inmost accountable property items falling below the entitysprescribed accountability threshold. At this point, propertym
34、anagers may transition the status of the property fromaccountable to administratively controlled thus saving time andresources that would otherwise be expended if the propertyremained accountable.7. Summary7.1 The objective of this practice is to ensure that the valuerecorded in an entitys property
35、and financial records fairlyreflect the value of each recorded property item.7.2 Review of records is necessary to avoid unintentionaland excessive operating cost in that the presence of records inof themselves drives cost.8. Keywords8.1 depreciation; fair market value; property; threshold;valuation
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