Fundamentals of Advanced Accounting 5th Edition by Joe Ben Hoyle,Thomas Schaefer,Timothy Doupnik

Exercise 43

A city receives a copy of its original charter from the year 1799 as a gift from a citizen. The document will be put under glass and displayed in the city hall for all to see. The fair value is estimated at $10,000. Indicate whether each of the following independent statements is true or false and briefly explain each answer.
A) If the city government does not have a policy for handling any proceeds if it ever sells the document, the city must report a $10,000 asset within its government-wide financial statements.
B) Assume that this gift qualifies for optional handling and that the city chooses to report it as an asset. For the government-wide financial statements, depreciation is required.
C) Assume this gift qualifies for optional handling and the document is deemed to be exhaustible. The city must report an immediate expense of $10,000 in the government-wide financial statements.
D) Assume that this gift qualifies for optional handling. The city must make a decision as to whether to recognize a revenue of $10,000 in the government-wide financial statements.
E) Assume that this gift qualifies for optional handling. The city can choose to report the gift in the statement of net activities for the government-wide financial statements in a way so that there is no overall net effect.