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General Capital Assets used by General Fund in general governmental service were acquired several years ago...

General Capital Assets used by General Fund in general governmental service were acquired several years ago by a governmental fund at a cost of $40,000. To date $30,000 of accumulated depreciation has been recorded. They were sold for $15,000 cash this year. Which of the following is correct?

No entries are necessary in General Fund since this is a general capital asset.

A debit to Accumulated Depreciation for $30,000 will be made in both General Fund and Government Wide.

Government Wide will record a gain on sale of assets of $5,000.

A credit to Other Financing Sources for $5,000 will be made by General Fund.
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Answer #1

Answer ) Government Wide will record a gain on sale of assets of $ 5000

Explanation : The General capital assets used by used by government department accounted for in the governmental funds should be reported in the government activities account at the government wide level .

As per given information :

The cost of the general capital asset was $ 40000

Accumulated depreciation was $ 30000 ( which was recorded )

Net value of asset = 40000 - 30000 = $ 10000

The asset was sold for $ 15000

Gain on sale of asset = $ 15000 -$ 10000

Gain on sale of asset = $ 5000

Government Wide will record a gain on sale of assets of $ 5000

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