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22 January, 13:47

A local citizen donated land with a fair market value of $500,000 to the county government. The donor had paid $550,000 for the land five years ago. The county incurred $150,000 in development costs to convert the land into a public park. The county should capitalize the new public park in the General Capital Assets accounts in the amount of

A.$500,000.

B.$550,000.

C.$650,000.

D.$700,000

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Answers (2)
  1. 22 January, 14:08
    0
    Your answer is C because the local citizen donated $500,000 + the county incurred $150,000more = $650,000
  2. 22 January, 17:34
    0
    C) $650,000

    Explanation:

    Government entities should record their assets at fair market value, not at cost basis. They should also include the land improvements as part of the total value of the land:

    total value of the land = $500,000 (donated land) + $150,000 (land improvements) = $650,000
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Home » Business » A local citizen donated land with a fair market value of $500,000 to the county government. The donor had paid $550,000 for the land five years ago. The county incurred $150,000 in development costs to convert the land into a public park.
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