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

Multiple Choice

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?

A) Loss on sale, $3,000,000
B) Revenue, $1,000,000
C) Expenditure, $3,000,000
D) Other financing source, $1,000,000