Cal. Code Regs. tit. 2 § 1071.6
Fixed assets shall be capitalized and their cost periodically charged against operations in the form of depreciation or amortization. The tests for distinguishing between capital costs and operating charges are found in the Controller's publication, Accounting for General Fixed Assets. At its option the operator may lower these standards, but may not raise them.
Depreciation on assets acquired with grant funds should be recorded in the appropriate depreciation expense account. Net income will reflect such depreciation. However, the account will be transferred to the related capital contribution account reflecting the proper equity within the contribution account.
Cal. Code Regs. Tit. 2, § 1071.6
Note: Authority cited and Reference: Section 53891, Government Code and Section 99243, Public Utilities Code.