The general fund of ABC city acquired two police cars at the beginning of January 2015, at a total cost of $40,000. The cars are expected to last for four years and have a $10,000 residual value. Straight-line depreciation is used.

On the statement of revenues, expenditures and changes in fund balance prepared for the governmental funds for the year ended December 31, 2015, the police cars will be reported as?

$40,000

$32,500

$0.00

$22,500