A city receives a copy of its original charter from the year 1799 as a gift from a citizen. The document will be put under glass and displayed in the city hall for all to see. The fair value is estimated at $10,000. Indicate whether each of the following Independent statements is true or false and briefly explain each answer. If the city government does not have a policy for handling any proceeds if it ever sells the document, the city must report a $10,000 asset within its government-wide financial statements. Assume that this gift qualifies for optional handling and that the city chooses to report it as an asset. For the government-wide financial statements, depreciation is required. Assume this gift qualifies for optional handling and the document is deemed to be exhaustible. The city must report an immediate expense of $10,000 in the government-wide financial statements. Assume that this gift qualifies for optional handling. The city must make a decision as to whether to recognize a revenue of $10,000 in the government-wide financial statements. Assume that this gift qualifies for optional handling. The city can choose to report the gift in the statement of net activities for the government-wide financial statements in a way so that there is no overall net effect.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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A city receives a copy of its original charter from the year 1799 as a gift from a citizen. The document will be put under glass and displayed in the city hall for all to see. The fair value is estimated at $10,000. Indicate whether each of the following Independent statements is true or false and briefly explain each answer.

If the city government does not have a policy for handling any proceeds if it ever sells the document, the city must report a $10,000 asset within its government-wide financial statements.
Assume that this gift qualifies for optional handling and that the city chooses to report it as an asset. For the government-wide financial statements, depreciation is required.
Assume this gift qualifies for optional handling and the document is deemed to be exhaustible. The city must report an immediate expense of $10,000 in the government-wide financial statements.
Assume that this gift qualifies for optional handling. The city must make a decision as to whether to recognize a revenue of $10,000 in the government-wide financial statements.
Assume that this gift qualifies for optional handling. The city can choose to report the gift in the statement of net activities for the government-wide financial statements in a way so that there is no overall net effect.

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