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Having been told repeatedly during his many years of service that depreciation was charged "in order to provide for thereplacement of capital asset," a member of a government'selectric utility (Enterprise Fund) board of directors was visiblyupset upon being advised by the controller that it would benecessary for the utility to go deeply in debt "in order to replacesome of our capital assets." " How can it be true, " he asks, "that we have operated profitable each year, have an $850,000 Net Assets balance and total Accumulated Depreciation account balancesof $6,000,000, have never made transfers to the General Fund, andyet have cash and investments totaling only $100,000? What is yourresponse?

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Accounting Basics, Accounting

Category:- Accounting Basics
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