Question

During the year, a wealthy local merchant donated a building to the city of Rosewood. The original cost of the building was $300,000. Accumulated depreciation at the date of the gift amounted to $250,000. The appraised value of the donation at the date of the gift was $600,000. At what amount should Rosewood record this donated property in the General Fund?

1) $50,000
2) $300,000
3) $600,000
4) $0

Answer 1

Rosewood should record the donated building in the General Fund at the appraised value at the time of the donation, which is $600,000.

Step-by-step explanation:

The city of Rosewood should record the donated building at the appraised value at the time of donation. This is because when non-monetary assets such as buildings are donated to a government entity, they are typically recorded at their fair market value rather than their historical cost or book value after depreciation. In this case, the appraised value of the building at the time of the donation was $600,000, and that is what should be recorded in the General Fund.