On July 1, 2019, a city used tax resources of $70,000 to acquire three police cars. The police cars were expected to have a useful life of three years, after which the salvage value would be $10,000. How much should the city report in its December 31, 2019, government-wide financial statements as investment in capital assets?

Question

Quizplus · Accepted Answer

The net investment in capital assets component represents the government's capital assets minus accumulated depreciation and minus outstanding balances of bonds, notes, or other borrowings attributable to acquiring, constructing, or improving those assets. The city's net investment in capital assets is $60,000 (capital assets of $70,000 less accumulated depreciation of $10,000). The city used tax resources on hand, not debt, to acquire the assets. The current-year depreciation is $10,000 or ($70,000 - $10,000)/3 x ½.

On July 1, 2019, a City Used Tax Resources of $70,000