In the year of a road maintance district was established, it enagage in the transactions that follow involving capital assets. The district maintaines only a single governmental general fund.

1 Received authority over roads previously owned by the county. The estimated replacement cost ofthe roads was $60,000. On average they have a remaining useful life of 40 years.

2 Aquiered machinery and equipment for $700, with general fund resources. They have a useful life of 10 years.

3 Incurred costs of $3,000 to construct a building. The construction was financed with general obligation bonds. The building has a useful life of 30years.

4 Aquired equipment having a fair value of $60 in exchange for $20 cash(from genera fund resources) plus used equipment for which the district paid $50. The used equipment had a fair value at the time of the trade of $40; depreciation of $25 had previously recognized.

5 Sold land that had be zquired for$90.

6 Received a donation of land from one the towns within the district. Tha land had cost the town $120,but at the time of the contribution had a fair market value of $500.

7 Incurred $1200 in road resurfacing costs. The district estimates that its roads must be resurfaced every four years if they are to be preserved in the condition they were in when they were acquired.

8 Recognized depreciation of $100 on its building,$70 on its machinery and equpment, and $1500 on its roads, in addition to any depreciation relating to the resurfacing costs.

a Prepare to record transactions so that they could be reflected in the district's government -wide statements. The district has opted to its infrastructure assets.

b Suppose instead that the district has elected not to depreciate its roads but to record as an expense only the costs necessary to preserve the roads in the condition they were when aquiered. How would your entries differ?

c If, in fact, the roads have a useful life of 40 years, do you think it is sound accounting not to depreciate the roads? Explain.

d If, in fact, the preservation costs are sufficient to preserve the roads in the condition they were in when the district aquired them, do you think it is sounds accounting to depereciate the roads? Exlain.