Budget Bulletin: Tangible Capital Assets

The province of Nova Scotia implemented an accounting policy for tangible capital assets in 1999-2000. The policy was reviewed and changes to the amortization rates and thresholds were approved in 2003-04. Amortization is the process of allocating the cost of a tangible capital asset over its estimated useful life to match costs with the revenues or public services that it helps provide.

In order to reflect more realistic useful lives of assets, amortization rates were revised as follows: (Asset class--original rate--revised rate) Computer hardware--30 per cent--50 per cent Ferries--20 per cent--15 per cent Vehicles--30 per cent--35 per cent Customized Software--50 per cent--25 per cent Asphalt--20 per cent--15 per cent Repaving--30 per cent--15 per cent

The following are the revised thresholds:
(Asset class--original thresholds--revised thresholds) Building and school betterments--$250,000--$150,000 Complete bridge replacements--$500,000--$250,000

The threshold for each category represents the minimum cost an individual asset must have before it is to be treated as a tangible capital asset and added to the proper asset class.

The 2003-04 TCA expense estimate of $129.2 million compares to a forecast of $103.4 million, a reduction of $25.8 million primarily due to the amortization rate and threshold changes.

The largest financial impact of the above changes will be in the roads, bridges and highways asset class.

NOTE: For further 2004-05 budget information, see the Department of Finance website at www.gov.ns.ca/finance .