Question

How do users utilize capital asset information? How do they use the modified approach RSI? What information do they need that they cannot obtain? (refer to specific GASB rules)

Answer 1

Required Supplementary Information:

To demonstrate whether resources were obtained and used in accordance with the government's legally adopted budget, RSI should include budgetary comparison schedules for the general fund and for each major special revenue fund that has a legally adopted annual budget. The budgetary comparison schedules should present both (a) the original and (b) the final appropriated budgets for the reporting period as well as (c) actual inflows, outflows, and balances, stated on the government's budgetary basis. This Statement also requires RSI for governments that use the modified approach for reporting infrastructure assets.

Required supplementary information (RSI). In addition to MD&A, this Statement requires budgetary comparison schedules to be presented as RSI along with other types of data as required by previous GASB pronouncements. This Statement also requires RSI for governments that use the modified approach for reporting infrastructure assets.

Capital assets are significant pieces of property such as homes, cars, investment properties, stocks, bonds, and even collectibles or art. For businesses, a capital asset is a type of asset with a useful life longer than a year, that is not intended for sale in the regular course of the business's operation. For example, if one company buys a computer to use in its office, the computer is a capital asset, but if another company buys the same computer to sell, it is considered inventory.

On a business's balance sheet, capital assets are represented by the property, plant and equipment figure. Examples include land, buildings and machinery. In some cases, these assets are only liquidated in worst-case scenarios, such as if a company is restructuring or declaring bankruptcy. In other cases, businesses dispose of capital assets because the business is growing and needs something better. For example, a business may sell one property and buy a larger one in a better location

How user utilize capital asset information

User utilize capital asset information by having a broad view on balance sheet and than they can decide how much to invest and they also calculate Potential earning per share .and Diluted earning Per share so to as to judge current and future earnings.

Information which they cannot obtain:

What are Its future prospects:

They cannot information regarding its future prospects , what are its future source of income , how much they will earn in future , expected production in next year , areas of investment in next year.this creates element of uncertainity.