Definition of a Statement of Net Assets

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The statement of net assets serves as a balance sheet for state and local governments. Corporate balance sheets show how the assets equal the shareholders' equity plus the company liabilities. That doesn't work for governments, which don't have shareholders. Instead, the statement shows how assets on one side of the equation equal liabilities plus "net assets." Net assets are what the government would have left it paid off every single debt.

Assets and Liabilities

The statement of net assets lists the government's assets in order of liquidity. Cash, the most liquid asset of all, goes at the top of the form. Usually, a net-assets statement uses the cash balance at the end of the reporting period. Capital assets such as buildings and equipment are listed at cost, less depreciation for wear and tear. A government doesn't have to depreciate infrastructure such as bridges and water mains if it invests in maintaining them. The government lists liabilities in the order they'll be paid off -- this year, next year or after that.

Net Assets

Net assets go on the statement in three categories. "Invested in capital assets (net of related debt)" is the value of capital assets, less the debt that financed them. "Restricted net assets" are reserved for a particular purpose. An example of a restricted net asset would be cash in a fund set aside for street repairs. Every asset that doesn't fit those two categories goes in the third category, "unrestricted net assets." For example, a government's general fund is an unrestricted asset because it represents a pool of cash that isn't reserved for any specific category of spending.

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