Is it ever acceptable to report fully depreciated capital assets?

The reasoning for the acceptability of reporting fully depreciated capital assets when they are deemed material stems from the principles of financial reporting and relevance. Generally, if a fully depreciated asset still holds significant economic value or contributes to the operations of an entity, it may be valuable information for stakeholders. Reporting such assets allows users of the financial statements to understand the entity's ongoing capacity to generate revenues and manage resources effectively.

If fully depreciated assets are not material, their inclusion may unnecessarily clutter financial statements or mislead stakeholders regarding the entity's current asset position. However, if these assets play a quantifiably significant role in the entity's operations or have a material economic value, then their reporting becomes beneficial and necessary to provide a complete view of the entity's financial health. This practice aligns with the accrual basis of accounting, where the ongoing utility of assets is recognized, even after they have reached the end of their useful lives for depreciation purposes.

This approach is particularly relevant for governmental entities, which may have different thresholds for materiality and public transparency, emphasizing the need to report on all capital resources, regardless of depreciation status.