Discuss the issues surrounding accounting treatment for assets and liabilities under the accrual accounting for the government of Malaysia. There are a lot of issues relating accounting treatment for assets and liabilities under accrual accounting for the government of Malaysia. This essay will separate the issues regarding assets and liabilities in different paragraphs. Issues relating accounting treatment of assets
One of the issue is that there are several assets that does not exist in private sector organizations but do exists in public sectors which are heritage assets, military assets and infrastructure assets. Issues relating to these heritage assets are regarding the life cycle of the assets. As we know, heritage assets have a long life cycle compared to other assets. The acquisition costs of most of the assets are unknown. Some of them are found by the archaeological researchers while the others may be acquired or seized during the war and so forth. This may affect the actual value of the assets. Moreover, some of the heritage assets have dual function. Example given in the PUMA/SBO (2002) is governments offices located in the historical palaces. There is some confusion whether to recognize this building as heritage assets or as normal assets. Military assets also do not exist in private sectors. The issues are whether it should be capitalised and depreciated or expensed. PUMA/SBO (2002) states that in US, military assets are divided into two categories which are for general purpose and specific purpose. The general purpose assets will be capitalised and depreciated while the specific assets will be expensed. However, other countries prefer to capitalize and recognize it as the same. If there is any loss, theft or disposal of the assets, it will be written off. Infrastructure assets are also one of the public sector’s assets. There are several issues discussed in the article by PUMA/SBO (2002). Similar to the heritage assets, these assets also have a...
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