Why Is Depreciation on Fixed Assets Not Recorded in the Records

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The Answer is Assets acquired with the resources of an expendable fund entity do not represent expendable financial resources but rather reflect the purposes for which the financial resources have been used.Thus, they are recorded and reported as expenditures of, rather than as assets of, the expendable fund entity.Depreciation is not accounted for in the records of an expendable fund entity for the same reasons that fixed assets are excluded from the records of such entities.Expenditures, not expenses, are measured in fund accounting.
Acquisitions of fixed assets require the use of financial resources and are accounted for as expenditures.Depreciation of such assets is not a use of the financial resources of an expendable fund entity and thus is not properly recorded in the accounts of such entities.Inclusion of depreciation expense in the operating statement of an expendable fund entity would confuse two fundamentally different measurements - expenditures and expenses.

Why Is Depreciation on Fixed Assets Not Recorded in the Records

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Why Is Depreciation on Fixed Assets Not Recorded in the Records

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Correct Answer:VerifiedShow Answer

Correct Answer:
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