SFFAS 7
Page 102 - SFFAS 7 FASAB Handbook, Version 22 (12/23)
entity’s outlays. However, it is not a net inflow of resources to the entity, because the asset
received (cash) is offset by an equal liability (debt). Therefore, it is not revenue or an other
financing source.
353. Disposition of revenue to other entities: custodial transfers
.—Revenue, primarily
nonexchange revenue, may be collected by an entity acting on behalf of the General Fund
or another entity within the Government on whose behalf it was collected. The collecting
entity accounts for the disposition of revenue as part of its custodial activity. These custodial
transfers, by definition, do not affect the collecting entity’s net cost of operations or operating
results, nor are they part of the reconciliation between its obligations and net cost of
operations. (The receiving entity recognizes the revenue as nonexchange or exchange
revenue, depending on its nature, according to the applicable revenue standards.)
354. Sales of different types of Government assets
.—The sale of Government assets (other than
forfeited property) is an exchange transaction, because each party receives and sacrifices
something of value. As a general rule, any difference between the sales proceeds and book
value is recognized as a gain or loss when the asset is sold. The remainder of the
transaction does not provide a net inflow of resources, so no gain, revenue, or other
financing source is recognized. If the sales proceeds equal book value, there is no gain or
loss, because the exchange of one asset for another of equal recorded value is not a net
inflow of resources.
355. This general rule applies to property, plant, and equipment, receivables (other than direct
loans), foreclosed property associated with pre-1992 direct loans and loan guarantees, and
miscellaneous assets. It does not apply to inventory, nor does it apply to forfeited property
(as explained in the previous section on nonexchange revenue). It also does not apply to
the sale of direct loans and the sale of foreclosed property associated with post-1991 direct
loans and loan guarantees. The latter transactions are discussed in subsequent
paragraphs.
356. Acquisition of property, plant, and equipment through exchange
.—The cost of property,
plant, and equipment (PP&E) acquired through an exchange of assets with the public is the
fair value of the PP&E surrendered at the time of exchange. If the fair value of the PP&E
acquired is more readily determinable than that of the PP&E surrendered, the cost is the fair
value of the PP&E acquired. If neither fair value is determinable, the cost of the PP&E
acquired is the cost recorded for the PP&E surrendered net of any accumulated
depreciation or amortization. In the event that cash consideration is included in the
exchange, the cost of PP&E acquired is increased (or decreased) by the amount of the cash
surrendered (or received).
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357. Any difference between the cost of the PP&E acquired and the book value of the PP&E
surrendered is recognized as a gain or loss. If the cost of the PP&E acquired equals the
book value of the PP&E surrendered, there is no gain or loss (nor a revenue or other
financing source), because the exchange of one asset for another of equal value does not
provide a net inflow of resources. Therefore, the amount of the transaction equal to the book
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See SFFAS No. 6, Accounting for Property, Plant, and Equipment, para. 32.