Is a high school building an asset or is it a liability? If it is neither,...

Is a high school building an asset or is it a liability? If it is neither, how should the cost be recorded? How is a high school reported in fund financial statements? How is the same high school reported in government-wide financial statements? Is the current method we use for government accounting the right approach to the case? What is a different approach other than the current method we can use for government accounting?

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Answer:

Is a high school building an asset or is it a liability?If it is neither, how should the cost be recorded? How is the high school reported in fund financial statements?

Although high school building does not posses all the characteristics of an asset but still it needs to be capitalized in the books of school because it cannot be expensed in income statement. High school building should be shown in Balance sheet under asset head in books.

Which of these two approaches provides the best portrayal of the decision to acquire or construct this building? Can a government possibly be accounted for in the same manner as a for-profit enterprise?

Recognizing high school building under asset group is better approach of the decision to acquire or construct this building. NO a government cannot be accounted for in the same manner as a for-profit enterprise. Rule of asset to be recognized only when it will generate future cash inflows, will be applicable in case of for-profit enterprise.

ekkarill92 answered 2 years ago

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