purpose of this procedure is to provide direction for recognizing and
recording Tangible Capital Assets (TCA) on a consistent basis and in
accordance with Public Sector Accounting Board (PSAB) PS 3150.
Tangible Capital Assets Defined
Tangible Capital Assets (TCA) are non-financial assets having physical substance that:
held for use in the production or supply of goods and services, for
rental to others, for administrative purposes or for the development,
construction, maintenance or repair of other tangible capital assets;
- Have useful economic lives extending beyond one year;
- Are used on a continuing basis; and
- Are not for resale in the ordinary course of operations.
TCA are acquired, constructed, or developed assets and have the following characteristics:
- Ownership and control clearly rest with the Division; and
- The asset is used to achieve the Division’s objectives.
The following will help determine whether an asset is a TCA:
land, buildings, infrastructure assets (roads, water network,
playground equipment; pools, fencing, and artificial turfs), vehicles,
computer hardware, tools, furniture, equipment, leasehold improvements,
and assets acquired by capital leases or by donations;
not include non-operational heritage assets such as museum and gallery
collections, other works of art, archives, archeological sites, ruins,
burial sites, monuments, and statutes;
- Do not include intangible assets such as copyrights, trademarks, patents, easements and rights-of-way.
Objective and Issues of this Procedure
objective of the TCA procedure is to prescribe the accounting treatment
for tangible capital assets so that users of the financial report can
discern information about the investment in Tangible Capital Assets and
the changes in such investment.
principle issues in accounting for TCA are the recognition of the
assets, the determination of their carrying amount, the amortization
charges and the recognition of any related impairment or disposal
independent valuation company was hired by the Division to identify and
cost the various TCA of the Division. Their complete report was
produced in 2009.
Recognition of Tangible Capital Assets Carrying Amounts (Cost)
cost of TCA includes the cost of any asset that has been acquired,
constructed, or developed with the intention of being used and normally
consumed in operations that achieve the school Division’s objectives.
also include betterments. Betterments are expenditures relating to the
alteration or modernization of an asset that appreciably prolong the
asset’s period of usefulness or improve its functionality.
Pooled Cost Approach
refers to the Pooled Cost Approach. Under this approach, similar
assets area added to one group, and they generally remain in the asset
class until it is fully amortized. Tangible capital assets reported
under the pooled cost approach are to be reported by year of purchase in
the applicable TCA class.
recorded using the pooled cost approach will have a deemed disposal at
the end of their useful life; individual disposals are not generally
recorded. If the asset is sold or disposed of before the end of its
useful life, the proceeds are to be recorded as revenue.
exceptional circumstances where there is a significant loss or disposal
incurred in a pooled class, the pool would be decreased for the loss of
disposal. For example, a school has a break-in and all the computers
are stolen. The gross book value of the stolen computers as well as the
related accumulated amortization would be removed from the computer
hardware pooled TCA class.
1. TCA will be tracked based on the type of asset class. The following tracking method will be used:
The classification of assets will be determined by the Chief Financial
Officer or designate considering the recommendations of the Ministry of
Education and the Division’s auditors.
Only TCA that exceed the asset class threshold will be capitalized. The
following are the thresholds that are being used to develop the initial
The initial TCA listing has been prepared and it is to be reviewed
annually by the CFO to determine whether or not the threshold should be
5. The Division does not capitalize interest costs incurred during the construction or development of TCA.
Expected useful life is normally the shortest of the asset’s physical,
technological, commercial and legal life and is based on its use by the
Division. In determining an asset’s useful life the present condition,
intended use, construction type and maintenance policy will be
considered, including how long the asset is expected to meet service
demands and the Division’s experience with similar assets.
The cost, less any residual value of a TCA with a limited life will be
amortized over its useful life using the straight line method. The
amortization method and estimate of useful life of the remaining
unamortized portion will be reviewed on a regular basis and revised when
the appropriateness of a change can be clearly demonstrated.
full year’s amortization is recorded in the year the asset is acquired,
constructed or developed and put into use, regardless of when this
event occurs in the fiscal year.
Transfer of assets to/from the Division will only be capitalized as a
TCA when the agreement provides for the transfer of ownership.
When TCA are taken out of service, destroyed or replaced due to
obsolescence, scraping or dismantling, the appropriate department must
notify the Finance Department of the asset description and effective
date of disposal.
will be retired from the accounts of the Division when the asset is
disposed of. The gain or loss on disposal will be calculated as the
difference between the proceeds received and the net book value of the
TCA. The gain or loss on disposal will be recorded in the financial
A lease will be recorded as a TCA and an offsetting liability when it
meets the test for a capital lease as defined by PSAB. PSAB uses a
“benefits and risks” approach to assessing if a leased asset should be
treated as a capital lease. If the “benefits and risks” of the asset are
essentially transferred to the Division (the lessee) then the lease is a
capital lease and the leased asset is a TCA if it exceeds the
11. A write down is used to reflect a permanent impairment in the value of an asset. This impairment may be a result of:
- Removal of the asset from service;
- Physical damage;
- Significant technological developments;
- A decline in or cessation of the need for the service provided by the asset; and
- A change in the law or environment affecting the asset usage.
the value of an asset is impaired, the cost of the asset will be
written down to reflect the decline in the asset’s value and its shorter
useful life. This write down is considered a loss (expense) in the
Reference: Public Sector Accounting Board (PSAB) PS 3150
Sections 85, 87, 109, 110, 347, 348, Education Act
March 30, 2011