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. 18, September 24, 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:
