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Complete the following exercises from Government and Not-for-Profit
Organizations:
E7-3
E8-4
Click the Assignment Files tab to submit your assignment.
P. 7-3
Which is the proper value to be assigned to certain donated assets? (This
is a question for which answers cannot be found in either GASB
pronouncements or in this text.)
A city’s road maintenance department received “donations” of two types
of assets:
1. From the county in which the city is located it received earthmoving
equipment. The equipment had cost the county $800,000 when it was
acquired five years earlier. Accounted for in a county proprietary fund,
its book value, net of accumulated depreciation at the time of donation,
was $500,000. Its fair market value was $530,000.
2. From the city’s own utility fund (a proprietary fund) it received
motor vehicles that had cost the city $400,000 when acquired three years
earlier. At the time of transfer, the vehicles were recorded on the utility’s
books at $180,000, net of accumulated depreciation. Their fair market
value was $225,000.
a. At what value should the city record in its government-wide financial
statements: (1) the earth-moving equipment, and (2) the motor vehicles?
b. Briefly justify your response, commenting on any apparent
inconsistencies in the values assigned to each of the two types of assets.
c. Comment on the significance of the resultant book values for
decisions or assessments to be made by statement users.
EX. 8-4 Complete on a separate tab of Excel