In the statewide financial statements, which represent the government-wide financial reporting model, depreciation is reported using the full accrual basis of accounting. This means long-term assets and liabilities are recognized, and depreciation is recorded systematically over the useful lives of capital assets.
The modified accrual basis (used in governmental funds) does not report depreciation because capital assets are not reported in those funds.
Relevant References:
GASB Statement No. 34 – Depreciation Reporting
GASB Concept Statement No. 1 – Measurement Focus and Basis of Accounting
GFOA – Capital Asset and Depreciation Policies
Answer: D. accrual basis
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