If land purchased by a city's proprietary fund,at a cost of $70,000,is later transferred to the city's Park Department (accounted for by the General Fund)it should be recorded in the governmental activities accounts at fair value on the date of transfer.

Question

Quizplus · Accepted Answer

The majority view is that the land should be recorded in the governmental activities accounts at its carrying value in the proprietary fund. The minority view also has a lot of merit; that is, record the land at fair value. Fair value would be used if the land had been contributed to the city's Park Department by an individual or organization external to the city.

If Land Purchased by a City's Proprietary Fund,at a Cost