A local government recorded the sale of a capital asset by recording a debit to cash and credit to proceeds of sale of capital asset.What is the worksheet entry when preparing the government-wide statements?

Question

Quizplus · Accepted Answer

When preparing government-wide statements, the sale of a capital asset needs to be recorded by debiting Proceeds of Sale of Capital Asset and crediting Capital Asset (Net) and Gain/Loss on Sale of Capital Asset. This ensures that the impact of the sale is properly reflected in both the statement of net position and statement of activities. Option A is incorrect because it does not record the change in the carrying value of the capital asset on the statement of net position. Option B is incorrect because it double-counts the impact of the sale on the statement of activities.

A Local Government Recorded the Sale of a Capital Asset