The City of Shiloh sold a used police car.The police car had a historical cost of $25,000, a fair value of $18,000, and was sold for $10,000.Assuming that the City maintains its books and records in a manner to facilitate the preparation of the fund financial statements, what is the appropriate entry in the General Fund to record this sale?

Question

Quizplus · Accepted Answer

When a government entity sells a capital asset for less than its historical cost, a loss is recognized. In the General Fund, the appropriate account to record the proceeds from the sale of a capital asset is "Other financing sources - sale of asset" as it is a non-operating revenue source. The entry should be Debit Cash $10,000; Credit Other financing sources - sale of asset $10,000.

The City of Shiloh Sold a Used Police Car