A general government department donates equipment with an original cost of $50,000 to an Enterprise Fund. The net book value as of the date of donation is $17,500, and its acquisition value is $15,000. The entry that should be recorded by the Enterprise Fund would be

Question

Quizplus · Accepted Answer

The correct entry for the Enterprise Fund is to recognize the equipment at its original cost ($50,000), record the accumulated depreciation to reflect its net book value ($32,500), and credit the difference as a capital contribution ($17,500). This approach aligns with accounting principles that require capital assets to be recorded at historical cost and contributions to be recognized at the net book value at the time of donation.

A General Government Department Donates Equipment with an Original Cost