A county acquires equipment for $10,000,000 for use for a community project, reported in a special revenue fund. The equipment has a 5-year life, no residual value. After 3 years, the equipment is sold for $1,000,000. Straight-line depreciation is used if appropriate. How is the sale reported in the special revenue fund?

Question

Quizplus · Accepted Answer

In governmental accounting, special revenue funds do not record depreciation. The sale of the equipment is recorded as an "other financing source" for the amount received, which is $1,000,000.

A County Acquires Equipment for $10,000,000 for Use for a Community