Final answer:
Escheat property should be reported as an asset in the governmental or proprietary fund's accounting records to which the property reverts after remaining unclaimed for a certain period.
Step-by-step explanation:
Escheat property generally should be reported as an asset in the governmental or proprietary fund to which it ultimately reverts. Escheat refers to the legal process by which the state or government gains the rights to unclaimed or abandoned property. After a period of time, if unclaimed property has not been reclaimed by an individual or legal entity, it escheats, or reverts, to the state. At this point, the property is reported as an asset in the accounting records of the relevant fund. In the context of governmental accounting, this asset would be recognized in a government's financial statements until such time that the rightful owner reclaims the property or until it is irrevocably escheated to the governmental entity.