Is the modified approach for reporting infrastructure available for business-type activities?

The modified approach for reporting infrastructure is designed to enhance the relevance and reliability of the financial reporting of infrastructure assets. Under this approach, instead of depreciating the infrastructure assets, an entity can choose to report the assets at historical cost and expense the costs of maintaining the assets, as long as the entity demonstrates that it maintains the assets at a specified condition level.

This modified approach is primarily applicable to governmental activities, especially those held by state and local governments, that have significant infrastructure networks like roads, bridges, and parks. However, when it comes to business-type activities, the modified approach is still relevant since it allows entities engaged in infrastructure-related activities, such as utilities or transportation services, to report their infrastructure assets effectively.

The option indicating that this modified approach applies to all infrastructure networks aligns with the principles of Governmental Accounting Standards Board (GASB) guidance, which includes considerations for both governmental and business-type activities. Therefore, the correct answer acknowledges that the modified approach is indeed available for infrastructure reporting across various types of activities, including business-type activities. This reflects the flexible nature of financial reporting allowed for public sector entities while aiming for consistency and transparency.