On July 1 Gilbert County bought computer equipment for use in the administrative offices of the County.The equipment has an estimated useful life of three years and salvage of $10,000.Gilbert County has a 6/30 fiscal year-end.Assuming that the County maintains its books and records in a manner that facilitates the preparation of government-wide financial statements, the $70,000 cost of this equipment would require which of the following entries?

Question

Quizplus · Accepted Answer

The cost of the equipment is capitalized as an asset in the government-wide financial statements since it has a useful life of more than one year and meets the capitalization threshold. Therefore, the entry would be to debit Equipment for $70,000 (the cost of the equipment) and credit Cash for $70,000 (the amount paid for the equipment). The entry would not be recorded in the General Fund since it is a capital asset and not an expenditure of the current period.

On July 1 Gilbert County Bought Computer Equipment for Use