Capital assets are accounted for in government wide statements on a
Capital assets are accounted for in government-wide statements on a full accrual basis.
The following summarizes the history of Sharp Hall, the main foreign language classroom building at a state university that base its accounting on the reporting model applicable to cities and other general purpose governments.
1. In 1985 the university constructed the building at a cost of $1,500,000. Of this amount, $1,000,000 was financed with bonds and the balance from unrestricted university funds.
2. In the 10 years from 1985 through 1995, the university recorded depreciation (as appropriate) based on an estimated useful life of 30 years.
3. In the same period, the university repaid $750,000 of the bonds.
4. In 1996 the university renovated the building at a cost of $3,000,000. The entire amount was financed with unrestricted university funds. The renovation was expected to extend the useful life of the building so that it would last a total of 25 more years—that is, until 2021.
5. In the 15 years from 1996 through 2011, the university recorded depreciation (as appropriate). Depreciation was calculated by dividing the undepreciated balance of the original cost, plus the costs of renovation, by the anticipated remaining life of 25 years.
6. In the same period, the university repaid the $250,000 balance of the debt.
7. In 2012 the university demolished the building so that the land on which it was situated could be converted into a practice field for the women’s soccer team.
Prepare the journal entries to summarize the history of the building, as reported in the university’s government-wide statements.
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