Accounting for Governmental & Nonprofit Entities
17th Edition
ISBN: 9780078025822
Author: Jacqueline L. Reck James E. Rooks Distinguished Professor, Suzanne Lowensohn, Earl R Wilson
Publisher: McGraw-Hill Education
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Question
Chapter 5, Problem 13C
a.
To determine
Describe the method to identify the impairment of the police station and the method of accounting and reporting it.
b.
To determine
Identify whether building repair costs be classified as enhancements or replacement costs.
c.
To determine
Explain accounting treatment for damaged furniture and radio equipment.
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Discuss the three questions for the following scenario, in very short answers:
Recording and Reporting of Damaged Capital Assets. A tornado damaged a part of the City of Westbrook's Police Station. Some of the costs related to the damage included the following:
The building wiring had to be replaced. Since the wiring was over 20 years old, replacing the wiring allowed the city to bring the wiring up to current code and accommodate the increasing technology needs of the police station.
A large section of the interior walls (dry-wall) had to be replaced and painted. The same type of material was used in replacing the interior walls.
All hardwood floors were replaced with the same materials.
Office furniture that had been gathered for transfer to the city's surplus storage facility was damaged beyond repair. Replacement furniture was on order but had not been received by the date of the tornado.
The police station's radio dispatch equipment suffered water damage.
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When Hurricane Katrina struck New Orleans, there was a significant loss of aquarium fish at the Audubon Aquarium of the Americas. FEMA originallystated that the aquarium needed to buy the fish from commercial vendors, a method the agency said would cost $616,849 but would comply with disaster aid laws. FEMA later reversed their decision and allowed the aquarium staff to catch the fish themselves at a total cost of $99,766. If it is assumed that the aquarium staff spent the $99,766 equally over a 12-month period of time, what rate of return per month did their effort represent? Assume FEMA would have given the aquarium the $616,849 at the end of month 12.
An owner of a Cinema Hall, on ascertaining that a portion of the ceiling of the hall was in need of repairs, decided to replace the whole of the ceiling with different but better materials. The new ceiling, in addition to enhancing the appearance of the hall, improved the acoustics. The total cost of the material and of erecting the new ceiling was $320,000. It was estimated that the cost of repairing the ceiling would have been $220,000. With reference to Income Tax Assessment Act 1997 and relevant case law, discuss the amount, if any, allowable as a deduction for income tax purposes. Kindly use the four sections of:1. Facts of the scenario 2. Relevant laws and cases 3. Application of laws and cases 4. Conclusion (Maximum 800 words
Chapter 5 Solutions
Accounting for Governmental & Nonprofit Entities
Ch. 5 - What are general capital assets? How are they...Ch. 5 - Prob. 2QCh. 5 - Prob. 3QCh. 5 - Prob. 4QCh. 5 - Prob. 5QCh. 5 - What is the accounting difference between using...Ch. 5 - Prob. 7QCh. 5 - Prob. 8QCh. 5 - Prob. 9QCh. 5 - What is a service concession arrangement, and why...
Ch. 5 - Prob. 12CCh. 5 - Prob. 13CCh. 5 - Prob. 14CCh. 5 - Under GASB standards, which of the following would...Ch. 5 - Two new copiers were purchased for use by the city...Ch. 5 - Maxim County just completed construction of a new...Ch. 5 - A capital projects fund would probably not be used...Ch. 5 - Prob. 16.5EPCh. 5 - Prob. 16.6EPCh. 5 - Prob. 16.7EPCh. 5 - Callaway County issued 10,000,000 in bonds at 101...Ch. 5 - Prob. 16.9EPCh. 5 - Prob. 16.10EPCh. 5 - Prob. 17EPCh. 5 - Prob. 18EPCh. 5 - Prob. 19EPCh. 5 - Prob. 20EPCh. 5 - Prob. 21EPCh. 5 - Prob. 22EPCh. 5 - Prob. 23EPCh. 5 - Prob. 24EP
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