The following table presents AOC’s capitalization thresholds and related useful lives:
PROPERTY TYPE
Real Property Improvements
Equipment and Vehicles
Assets Under Capital Lease
Internal Use Software (Intellectual Property)
L. Stewardship PP&E
Stewardship land and heritage assets have physical properties that resemble those of General PP&E, which are traditionally capitalized in the financial statements. Due to the nature of stewardship assets, however, determining a monetary value would be difficult, and matching costs with specific periods may not be possible or meaningful. Heritage assets are PP&E that are unique and are generally expected to be preserved indefinitely. Heritage assets have historical or natural significance; are of cultural, educational, or artistic importance; or have significant architectural characteristics. These assets are reported in terms of physical units rather than cost or other monetary values per SFFAS No. 29 Accounting for Heritage Assets and Stewardship Land. There are two types of heritage assets: collection, which are objects gathered and maintained for exhibition, such as museum and art collections; and non-collection, which are parks, memorials, monuments and buildings. The AOC holds both collection and non-collection heritage stewardship assets (see Note 9).
M. Liabilities
Liabilities represent the amounts owed to others for goods or services received, claims against the agency, and amounts owed for progress in contract performance. Some liabilities are funded while others are unfunded because no liability may be paid without an enacted appropriation. For example, future appropriations may be enacted to fund activities for accrued unfunded annual leave and workers’ compensation. The Balance Sheet presents the following types of liabilities:
Accounts Payable Advances from Others Debt Held by the Public Unfunded Actual and Actuarial Workers’ Compensation
USEFUL LIFE (YEARS)
40 20
3–15 Shorter of Lease
Term or Useful Life of Property Type
3
CAPITALIZATION THRESHOLD
$500,000 $500,000
$25,000 See Related Property Type $5,000,000
Contingent and Environmental Liabilities Accrued Annual Leave Capital Lease Liability Contract Holdbacks Other Liabilities
Accounts Payable Accounts Payable are amounts owed by AOC to vendors, contractors, and federal agencies for goods and services received but not yet paid at the end of the reporting period.
Advances from Others Advances from Others consists of amounts advanced to AOC by other Federal trading partners for services provided under reimbursable agreements.
Debt Held by the Public The AOC recognizes a liability for the 30-year Coupon Certificates of Participation issued to finance the TMFJB construction. The liability is reduced by semi-annual payments of principal and interest. These payments are secured by the rent collected from the Administrative Office of the U.S. Courts (see Note 13).
Contract Holdbacks Contract Holdbacks (retainage) consists of a percentage of the contract price that is due to the vendor or contractor but is held by the AOC to provide assurance that the service or project will be completed as required by the contract terms. The amount that is held-back is released to the vendor or contractor upon satisfactory completion of the service or project.
Contingent and Environmental Liabilities The AOC accounts for contingencies in accordance with SFFAS No. 5, Accounting for Liabilities of the Federal Government. This standard defines a contingency as an existing condition, situation, or set of circumstances involving uncertainty as to the possible gain or loss to an entity that will ultimately be resolved when one or more future events occur or fail to occur. Management recognizes a contingent liability for liabilities equal to or greater than $100 thousand when a past transaction or event has occurred, a future outflow or other sacrifice of resources is probable and the related future outflow is measurable (see Note 14).
SFFAS No. 5 also provides criteria for recognizing a contingent liability for material amounts of environmental cleanup costs that are related to general and stewardship PP&E used in federal operations. In accordance with Technical Bulletin 2006-1, Recognition and Measurement of Asbestos-Related Cleanup Costs, AOC recognizes a liability and related expense for friable and non-friable asbestos cleanup costs when it is both probable and reasonably estimable — consistent with SFFAS No. 5, SFFAS No. 6, and Technical Release No. 2 (see Note 14).
2019 PERFORMANCE AND ACCOUNTABILIT Y REPORT Financial Information • Section III 105
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