Governments sometimes add to, but do not delete, their capital assets.

P. 7-4 Governments sometimes add to, but do not delete, their capital assets.
The
following totals were drawn from Independence City’s “Schedule of
Changes in Capital Assets by Function and Activity,” included in the
city’s financial statements for the year ending June 30, 2012:
General capital assets, July, 1, 2011 $33,276,151
Additions/transfers-in 459,430
Deletions/transfers-out (265,795)
General capital assets, June 30, 2012 $33,469,786
The
complete schedule disaggregates the data by function (e.g., general
government, public safety, public works, health and welfare, culture,
and recreation) and subfunction (e.g., park maintenance, recreation,
tourism). Another schedule, “Schedule of General Capital Assets by
Source,” shows the beginning and ending balances of the specific types
of assets:
Type of Asset 2012 2011
Land $ 8,209,380 $ 8,209,380
Buildings $ 9,293,847 $ 9,292,611
Improvements other $ 1,088,307 $ 1,088,307
than buildings
Office furniture and $ 4,863,535 $ 4,536,506
equipment
Mobile equipment $ 7,834,277 $ 8,073,945
Other equipment $ 2,180,440 $ 2,075,402
Total $ 33,469,786 $ 33,276,151
1.
Assume that the assets, excluding land, had an average useful life of
20 years. What percentage of the total assets, excluding land, would you
expect to have been retired each year?
2. What percentage of the
assets (beginning of year values). Excluding land, were actually
retired during 2012 (assuming that all deletions/transfers out represent
retirements?
3. What was the average useful life of the assets as implied by this percentage?
4.
Assume that the entire $265,795 of the deletions and transfers-out
applied to the mobile equipment. What would have been the useful life of
the equipment as suggested by the percentage of the equipment retired?

 

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