18th Edition

ISBN: 9781264107919

Author: RECK

Publisher: MCG CUSTOM

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The word "depreciation" is defined as an accounting method wherein the cost of tangible assets is spread over its useful life and it usually denotes how much of the assets value has been used up. The depreciation is usually considered as an operating exp…

Depreciation Accounting

In terms of accounting, with the passage of time the value of a fixed asset (like machinery, plants, furniture etc.) goes down over a specific period of time is known as depreciation. Now, the question comes in your mind, why the value of the fixed asset…

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Textbook Question

Chapter 5, Problem 21EP

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 $2,000,000 and had accumulated depreciation of $500,000 as of the date of the hurricane. Based on a restoration cost analysis, city engineers estimate the impairment loss at $230,000; however, the city expects during the next fiscal year to receive insurance recoveries of $120,000 for the damage.

Required

a. Should the estimated impairment loss be reported as an extraordinary item? As a special item? Explain.
b. Record the estimated impairment loss in the journal for governmental activities at the government-wide level.
c. How should the insurance recovery be reported in the following fiscal year? (You need not provide the journal entry or entries here.)

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Chapter 5, Problem 20EP

Chapter 5, Problem 22EP

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Chapter 5 Solutions

ACCOUNTING F/GOV.+..(LL)-W/CODE>CUSTOM<

Ch. 5 - What are general capital assets? How are they...Ch. 5 - Explain what disclosures the GASB requires for...Ch. 5 - Prob. 3Q Ch. 5 - Prob. 4Q Ch. 5 - Prob. 5Q Ch. 5 - What is the accounting difference between using...Ch. 5 - Prob. 7Q Ch. 5 - Prob. 8Q Ch. 5 - Prob. 9Q Ch. 5 - What is a service concession arrangement, and why...

Ch. 5 - Prob. 13C Ch. 5 - Prob. 14C Ch. 5 - Prob. 15C Ch. 5 - Under GASB standards, which of the following would...Ch. 5 - Two new copiers were purchased for use by the city...Ch. 5 - Maxim County just completed construction of a new...Ch. 5 - A capital projects fund would probably not be used...Ch. 5 - Machinery and equipment depreciation expense for...Ch. 5 - Prob. 17.6EP Ch. 5 - Prob. 17.7EP Ch. 5 - Callaway County issued 10,000,000 in bonds at 101...Ch. 5 - Neighborville enters into a lease agreement for...Ch. 5 - Neighborville enters into a lease agreement for...Ch. 5 - Prob. 17.11EP Ch. 5 - Prob. 17.12EP Ch. 5 - Prob. 17.13EP Ch. 5 - Arbitrage rules under the Internal Revenue Code a....Ch. 5 - Prob. 17.15EP Ch. 5 - Make all necessary entries in the appropriate...Ch. 5 - Prob. 19EP Ch. 5 - Prob. 20EP Ch. 5 - In the current year, the building occupied by...Ch. 5 - Prob. 22EP Ch. 5 - Make all necessary entries in a capital projects...Ch. 5 - The year-end pre-closing trial balance for the...Ch. 5 - Prob. 25EP Ch. 5 - This year Riverside began work on an outdoor...

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Solution Summary: The author explains how the impairment loss should be reported as a special or extraordinary item. The hurricane that hit City S was reported after 48 years.

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