F10 – Government-wide Financial Statements

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    Topic
  • #1895574
    shawnl112
    Spectator

    Nack City received a donation of a valuable painting. Nack planned to add the painting to its collection and display it in the protected exhibition area of city hall.

    Nack had a policy that if such donated art works were sold, the proceeds would be used to acquire other items for its collections. Which of the following would be correct regarding the donated painting?

    A. Must be capitalized but not depreciated
    B. Must be capitalized and depreciated
    C. May be capitalized but it is not required and it must be depreciated
    D. May be capitalized but it is not required and depreciation is not required

    Why do we not depreciate?

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  • #1895787
    Globetrotter
    Participant

    Shawnl112,
    Is D a correct answer?
    From what I understand, we do not capitalize a piece of art, if it is for public exhibition or if it is to be sold to buy another piece of art.
    As far as depreciation goes. Here is my thinking. If you have a Picasso today, will it be worth less in 50 years? Not likely.

    #1896516
    shawnl112
    Spectator

    Thank you….good answer and yes D is correct

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