Question: The City of Loveland previously adopted GASB Statement 34 Now

The City of Loveland previously adopted GASB Statement 34. Now city officials are attempting to determine reported values for major infrastructure assets that it had obtained prior to the implementation of the statement. The chief concern is determining a value for the city's hundreds of miles of roads that were built at various times over the past 20 years. Each road is assumed to last for 50 years (depreciation is 2 percent per year).
As of December 31, 2010, city engineers believed that one mile of new road would cost $2.3 million. For convenience, each road is assumed to have been acquired as of January 1 of the year in which it was put into operation. Officials have done some investigation and believe that the cost of a mile of road has increased by 8 percent each year over the past 30 years.

Build a spreadsheet to determine what value should now be reported for each mile of road depending on the year it was put in operation. For example, what reported value should be disclosed in the governmentwide financial statements for 10 miles of roads put into operation on January 1, 2003?

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  • CreatedOctober 04, 2014
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