United States DEPARTMENT of Commerce

N O T E S T O T H E F I N A N C I A L S T A T E M E N T S
J General Property, Plant, and Equipment, Net
General Property, Plant, and Equipment, Net (General PP&E) is composed of capital assets used in providing goods or services.
General PP&E is stated at full cost, including all costs related to acquisition, delivery, and installation, less Accumulated Depreciation.
General PP&E also includes assets acquired through capital leases, which are initially recorded at the amount recognized as a
liability for the capital lease at its inception.
Capitalization Thresholds: The Department’s general policy is to capitalize General PP&E if the initial acquisition price is
$25 thousand or more and the useful life is two years or more. NOAA is an exception to this policy, based on a cost vs. benefits
and materiality analysis given the size of NOAA, having a capitalization threshold of $200 thousand. General PP&E with an
acquisition cost less than the capitalization threshold is expensed when purchased. When the purchase of a large quantity of
items, each costing less than the capitalization threshold, would materially distort the amount of costs reported in a given period,
the purchase is capitalized as a group.
Depreciation: Depreciation is expensed on a straight-line basis over the estimated useful life of the asset with the exception of
leasehold improvements, which are depreciated over the remaining life of the lease or over the useful life of the improvement,
whichever is shorter. Land and Construction-in-progress are not depreciated.
Real Property: The U.S. General Services Administration (GSA) provides most of the facilities in which the Department operates,
and generally charges rent based on comparable commercial rental rates. Accordingly, GSA-owned properties are not included
in the Department’s General PP&E. The Department’s real property primarily consists of facilities for NIST and NOAA. Land
Improvements consist of a retaining wall to protect against shoreline erosion.
Construction-in-progress: Costs for the construction, modification, or modernization of General PP&E are initially recorded as
Construction-in-progress. Upon completion of the work, the costs are transferred to the appropriate General PP&E account for
capitalization.
K Notes Receivable
Notes Receivable, included in Other Assets, arise through the NOAA sale of foreclosed property to non-federal parties. The property
is used as collateral, and an Allowance for Uncollectible Amounts is established if the net realizable value of the collateral is less
than the outstanding balance of the Notes Receivable. An analysis of the collectibility of receivables is performed periodically.
Any gains realized through the sale of foreclosed property are initially deferred and recognized in proportion to the percentage of
principal repaid.
L Non-entity Assets
Non-entity assets are assets held by the Department that are not available for use in its operations. The non-entity Fund Balance
with Treasury primarily represents customer deposits held by the Department until customer orders are received. Non-entity Loans
Receivable and Related Foreclosed Property, Net represents EDA’s Drought Loan Portfolio. The Portfolio collections are submitted
to Treasury monthly.
M Liabilities
A liability for federal accounting purposes is a probable and measurable future outflow or other sacrifice of resources as a result
of past transactions or events.
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