Which is the proper value to be assigned to certain donated assets? (This is a question for which answers cannot be found in either GASB pronouncements or the text), research is necessary.
A city's road maintenance department received "donations" of two type of assets:
From the couty in which the city is located it received earthmoving equipment. The equipment had cost the county $800,000 when it was acquired five years ealier. Accounted for in a county proprietary fund, its book value, net of accumulated deprecition at the time of donantion, was $500,000. Its fair market value was $530,000.
From the city's own utility fund (a proprietary fund) it received motor vehicles that had coty the city $400,000 when acquired three years earlier. At the time of transfer, the vehicles were recorded on the utility's books at $180,000, net of accumulated depreciation. Their fair market value was #225,000.
Write a 1000 word, APA style paper where you answer the following:
At what value should the city record in its government-wide financial statements for: (1) the earth-moving equipment, and (2) the motor vehicles?
Briefly justify your response, commenting on any apparent inconsistencies in the values assigned to each of the two types of assets.
Comment on the significance of the resultant book values for decisions or assessments to be made by statement users.