On January 1, 2015, the City of Graf pays $68,000 for a work of art to display i

Question

On January 1, 2015, the City of Graf pays $68,000 for a work of art to display in the local library. The city will take appropriate measures to protect and preserve the piece. However, if the work is ever sold, the money received will go into unrestricted funds. The work is viewed as inexhaustible, but the city has opted to depreciate this cost over 20 years (using the straight-line method).

How is this work to be reported on the government-wide financial statements for the year ended December 31, 2015? (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

1. Record payment made for display of artwork.
2. Record depreciation expense.

How is this work to be reported in the fund financial statements for the year ended December 31, 2015? (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

1. Record payment made for artwork.

On January 1, 2015, the City of Graf pays $68,000 for a work of art to display in the local library. The city will take appropriate measures to protect and preserve the piece. However, if the work is ever sold, the money received will go into unrestricted funds. The work is viewed as inexhaustible, but the city has opted to depreciate this cost over 20 years (using the straight-line method).

Explanation / Answer

Depreciation is on SLM basis therefore Dep= cost - salvage value /life of asset

= 68000-0/ 20

= $ 3400

Payment for artwork = $ 68000

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