Check In the current year, the building occupied by Sunshine City's Culture and Recreation Department suffered severe structural damage as a result of a hurricane. It had been 48 years since a hurricane had hit the Sunshine City area, although hurricanes in Sunshine City's geographic area are not uncommon. The building had been purchased 10 years earlier at a cost of $3,800,000 and had accumulated depreciation of $950,000 as of the date of the hurricane. Based on a restoration cost analysis, city engineers estimate the impairment loss at $410,000; however, the city expects during the next fiscal year to receive insurance recoveries of $210,000 for the damage. Required a. Should the estimated impairment loss be reported as an extraordinary item? As a special item? A special item An extraordinary item Ordinary expense, disclosed in the notes to the financial statements b. Record the estimated impairment loss in the journal for governmental activities at the government-wide level. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.) Transaction Governmental Activities 1. Record the estimated impairment loss. 1 Governmental Activities General Journal Debit Credit
Check In the current year, the building occupied by Sunshine City's Culture and Recreation Department suffered severe structural damage as a result of a hurricane. It had been 48 years since a hurricane had hit the Sunshine City area, although hurricanes in Sunshine City's geographic area are not uncommon. The building had been purchased 10 years earlier at a cost of $3,800,000 and had accumulated depreciation of $950,000 as of the date of the hurricane. Based on a restoration cost analysis, city engineers estimate the impairment loss at $410,000; however, the city expects during the next fiscal year to receive insurance recoveries of $210,000 for the damage. Required a. Should the estimated impairment loss be reported as an extraordinary item? As a special item? A special item An extraordinary item Ordinary expense, disclosed in the notes to the financial statements b. Record the estimated impairment loss in the journal for governmental activities at the government-wide level. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.) Transaction Governmental Activities 1. Record the estimated impairment loss. 1 Governmental Activities General Journal Debit Credit
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Check
In
the current year, the building occupied by Sunshine City's Culture and Recreation Department suffered severe structural damage as
a result of a hurricane. It had been 48 years since a hurricane had hit the Sunshine City area, although hurricanes in Sunshine City's
geographic area are not uncommon. The building had been purchased 10 years earlier at a cost of $3,800,000 and had accumulated
depreciation of $950,000 as of the date of the hurricane. Based on a restoration cost analysis, city engineers estimate the impairment
loss at $410,000; however, the city expects during the next fiscal year to receive insurance recoveries of $210,000 for the damage.
Required
a. Should the estimated impairment loss be reported as an extraordinary item? As a special item?
A special item
An extraordinary item
Ordinary expense, disclosed in the notes to the financial statements
b. Record the estimated impairment loss in the journal for governmental activities at the government-wide level. (If no entry is
required for a transaction/event, select "No Journal Entry Required" in the first account field.)
Transaction
Governmental
Activities
1. Record the estimated impairment loss.
1
Governmental Activities
General Journal
Debit
Credit
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