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    Governmental accounting: internal service fund depreciation

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    Depreciation of general capital assets is not recorded in the accounts of any of the governmental funds. If a building is transferred from the General Fund to an internal service fund because the character of its use changes, should the internal service fund record building depreciation expense each year after the transfer? Explain.

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    The internal service fund has the option to do this either way. The decision is based on whether they want the pricing to include depreciation or not. If they do not, the pricing will not be at the rate needed when the asset is replaced. But that is ...

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