What are the differences in how depreciation is treated by government and by companies in the private
sector?
A city government purchases a new garbage truck for $120,000 this year. It is estimated that the truck
will have a residual value of $20,000 and a useful economic life of 20 years. What would be the
depreciation expense each year if the straight-line method were used.
Why do organizations, government included, not capitalize all assets that last for more than one budgeting
period, despite knowing that doing so would increase the accuracy of the accounting of assets and
operations?
City Hospital paid $500,000 for a piece of advanced diagnostic equipment. The total transportation and
installation cost to make the equipment operational is $50,000. The staff-training cost to operate the new
equipment is about $10,000. What should be the value of this capital asset?