New Mexico Administrative Code › Title 2 - PUBLIC FINANCE › Chapter 20 - ACCOUNTING BY GOVERNMENTAL ENTITIES › Part 1 - ACCOUNTING AND CONTROL OF FIXED ASSETS OF STATE GOVERNMENT, ACCOUNTING FOR ACQUISITIONS AND ESTABLISHING CONTROLS › Section 2.20.1.10 - VALUATION OF ASSETS

Current through Register Vol. 35, No. 13, July 16, 2024
A. All fixed
				assets should be acquired in compliance with the procurement ("Procurement Code
				Regulations") and applicable statutes.
B. Fixed assets acquired through purchase
				shall be recorded at cost. In most cases cost is equal to monetary value
				exchanged, plus associated costs to prepare the asset for its intended use.
				These costs include freight or shipping, taxes, site preparation and
				installation, testing, reconditioning and other similar costs. If
				considerations other than cash are exchanged for the assets, the fair market
				value of such consideration at the time of the transaction is the proper
				measure of the cost of the assets so acquired.
C. Fixed assets include those assets
				constructed by agency personnel. Construction costs for such assets include
				direct labor (salary including overtime), materials, equipment usage
				(depreciation, rental, supplies, etc.), and overhead that can be distributed on
				the basis of direct labor such as employee benefits.
D. Fixed assets that are donated to the
				agency should be recorded at fair market value at the time of donation. Fair
				market value may require a professional appraisal of the property. If there is
				any doubt about the rights to the property, it should not be recorded until
				such rights are clearly established. Such doubts include any conditions or
				restrictions on the use or future disposition of the property. Should any
				restrictions adversely affect the value, they should be recognized in the final
				determination of the valuation to be recorded.
E. Fixed assets may also be acquired through
				governmental reorganization (including those that result in residual equity
				transfers), specific legislation, mutual agreement between agencies, or a
				capital project. These shall be placed in an agency's fixed asset inventory at
				the time the assets are transferred to the agency. The transfer will require
				the entity transferring the fixed asset to provide information that properly
				identifies the asset(s) being transferred. The information, in addition to the
				requirements of Section
				2.20.1.9
				NMAC above should include estimated service life and accumulated
				depreciation.
F. Agencies may
				acquire fixed assets through a capital project fund. Assets transferred may
				include land and new construction, renovated or remodeled buildings, furniture,
				fixtures and equipment. If the assets are transferred from another agency,
				e.g., the facilities management division of the New Mexico general services
				department, the transferring agency will provide the capitalized costs to
				record in the receiving agency's books.
G. In certain instances agencies may enter
				into lease agreements that are properly classified as capital leases. In a
				capital lease, the result is that the agency either acquires or has the right
				to acquire the property at the end of the lease. In addition, for accounting
				purposes the property is considered to be purchased if:
(1) the present value of the lease payments
				is ninety percent or more of the purchase price,
(2) the lease extends for at least
				seventy-five percent of the asset's useful life,
(3) the lease contains a bargain purchase
				clause, or
(4) if title passes to
				the lessee at the end of the lease.