volution of government accounting, many scholars have discussed its unique a city should record a new IS IT AN ASSET OR A LIABILITY? ring the long evolution of government account in the August 1989 issue of the Journal of Accountancy. R. K. Mautz described features. In the August 1989 the reporting needs of governments ar eeds of governments and not-for-profit organizations (such as charities) in Not-For-Profit Financial Reporting: Another View To illustrate the governmental aco trate the governmental accounting challenges, Mautz examined the method by which uld record a newly constructed high school building. Conventional business wisdom say that such a property is an asset owned by the government. Thus, the cost should be italized and then depreciated over an estimated useful life. However, in paragraph 26 of FASB Concepts Statement No. 6, an essential characteristic of an asset is a probable future benefit... to contribute directly or indirectly to future net cash inflows." Mautz reasoned that the school building cannot be considered an asset because it provides no net contribution to cash inflows. In truth, a high school requires the government to make significant cash outflows for maintenance, repairs, utilities, salaries, and the like. Public educa- tional facilities (as well as many of the other properties of a government such as a fire station or municipal building) are acquired with the understanding that net cash outflows will result for years to come. Consequently, Mautz then considered whether the construction of a high school is not actu- any the establishment of a liability because the government is taking on an obligation that will sitate future cash payments. He also rejects this idea, once again based on the guidance of Statement No. 6 (para. 36), because a probable future transfer or use of assets is not required at a "specified recorded? How is the high school reported in gover best portrays the decision to accounted for in the same a specified or determinable date, on occurrence of a specified event, or on demand." 9 school building an asset or is it a liability? If it is neither, how should the cost be How is the high school reported in fund financial statements? How is the high Ported in government-wide financial statements? Which of these two approaches e decision to acquire or construct this building? Can a government possibly be the same manner as a for-profit enterprise