To prepare the governmental activities column of the government-wide statement of activities, expenditures for capital outlay reported in a governmental fund during the current year should be reclassified as depreciation expense.

Question

Quizplus · Accepted Answer

Depreciation expense is recorded for governmental fund activities in the government-wide statement of activities. However, expenditures for capital outlay reported in governmental funds during the current year should be reversed and instead reported as capital assets. Expenses and expenditures are different concepts. Depreciation expense is the allocation of the cost of a capital asset over its estimated useful live.

To Prepare the Governmental Activities Column of the Government-Wide Statement