Question

On January 1, 2017, a rich citizen of the Town of Ristoni donates a painting valued at $444,000 to be displayed to the public in a government building. Although this painting meets the three criteria to qualify as an artwork, town officials choose to record it as an asset. There are no eligibility requirements for the gift. The asset is judged to be inexhaustible so that depreciation will not be reported. For the year ended December 31, 2017, what will be reported on government-wide financial statements in connection with this gift? How does the answer to requirement (a) change if the government decides to depreciate this asset over a 10-year period using straight-line depreciation? How does the answer to requirement (a) change if the government decides not to capitalize the asset?

Answer 1

ANSWER:-

ans a
Following information shuld be reported in Financial statements
The date on which the Gift is received	January 1 2017
The person from whom gift is received	Rich citized -name
The nature of the Gift	Artwork
The value (amount) of the gift	$444,000
ans b
The value of the asset	$444,000
Method of Depreciation	Straight Line
Amount of depreciation per year 428000/10	$44,400
ans c
Nature of the revenue
Value of the revenue	$444,000
The reasons of not capitalizing the artwork