Which statement regarding capital assets is not true?

• A. Fiduciary funds do not account for property, plant, and equipment within the fund financial statements.
• B. General capital assets are reported in government-wide statements at historical cost.
• C. Donated assets are recognized in government-wide statements at fair value.
• D. Capital assets are depreciated over their useful lives in the government-wide statements.

Answer: (D)

In government-wide financial statements, capital assets are measured on an accrual basis and capitalized, with depreciation used to allocate the asset’s cost over its estimated useful life. This means the cost to acquire or construct a capital asset is recorded initially, then the carrying amount is reduced over time through depreciation as the asset provides benefits. Donated capital assets are recorded at their fair value on the date of donation, so the government reflects the value it actually received. General capital assets appear in government-wide statements at historical cost, and depreciation is recognized to reflect their consumption over time. Fiduciary funds, on the other hand, do not include property, plant, and equipment in their fund financial statements; those assets are reflected in the government-wide statements or in specific accounting, not in the fiduciary fund statements.