STAFF IMPLEMENTATION GUIDANCE 23.1

Guidance for Implementation of SFFAS 23, Eliminating the Category National Defense 

Property, Plant, and Equipment 

Classification of Items Formerly Considered National Defense PP&E 

Background

1. Statement of Federal Financial Accounting Standards (SFFAS) 23, Eliminating the Category 

National Defense Property, Plant, and Equipment, rescinded SFFAS 11, Amendments to 

Accounting for Property, Plant, and Equipment - Definitional Changes in its entirety. SFFAS 

11 established the definition of National Defense Property, Plant, and Equipment (ND 

PP&E). Its rescission eliminated the category ND PP&E along with the definition for that 

term. Implementing guidance contained in SFFAS 23 provides that: 

10. The initial capitalization amount for assets previously considered ND 

PP&E should be based on historical cost in accordance with the asset 

recognition provisions of SFFAS No. 6 [Accounting for Property, Plant, 

and Equipment], as amended, and should be the initial historical cost for 

the items, including any major improvements or modifications. (Emphasis 

added.) 

2. The above text suggests that all items formerly considered ND PP&E should be classified as 

PP&E. In addition, par. II of SFFAS 23 provides that “all items previously considered ND 

PP&E are classified as general PP&E.” Par. 6b of SFFAS 23 also refers to classification as 

general PP&E. 

Staff Implementation Guidance

3. Q: Should par. 10 of SFFAS 23 limit the classification of items previously considered 

ND PP&E to general PP&E? 

4. A: No. A reasonable approach would be to subordinate SFFAS 23’s general implementation 

guidance to the definitions in accounting standards. That is, assets being recognized due to 

the implementation of SFFAS 23 should be categorized in accordance with asset definitions 

in SFFAS 6 and other accounting standards. 

5. Q: SFFAS 23 implementation guidance describes acceptable approaches to valuing 

those items of ND PP&E to be classified as general PP&E. How should items of ND 

PP&E not classified as general PP&E be valued? 

6. A: Any items not properly classified as general PP&E should be valued in a manner 

consistent with the general principles established in SFFAS 23 implementation guidance 

and the specific measurement guidance provided in accounting standards for the relevant 

asset class. 
Basis for Conclusions

7. A literal application of SFFAS 23, par. 10 would result in de facto amendments to the PP&E 

definition contained in SFFAS 6 and any asset definitions promulgated by other standards. 

That is, all asset definitions other than general PP&E would have to exclude ND PP&E and 

the general PP&E definition would have to include ND PP&E. 

8. Consequences of reading the implementation guidance as amending the definitions 

remaining in current standards include: 

a. Inconsistency in classification of assets between the components of the Department of 

Defense and all other federal entities, 

b. Possible inconsistent accounting for the items subject to implementation guidance in 

SFFAS 23 and items acquired in the future by the Department of Defense, and 

c. Reliance on a definition that has been purged from authoritative publications such as the 

Original Pronouncements volume. 

9. Staff implementation guidance resolves the inconsistency between the definitions and the 

implementation guidance by subordinating par. 10 of SFFAS 23 to asset definitions in 

accounting standards. 

Effective Date

10. This guidance is effective upon issuance.