A city acquires $1 million of public safety emergency communication equipment by entering into a capital lease The city divides its rst rent payment of $ 135,868 between lease interest and lease principal as follows Lease interest $ 60,000 Lease principal $ 75,868 The city comptroller is not sure h...

The interest portion of the payment should be reported as a public safety program expense GASB State ...

A city acquires $1 million of public safety emergency communication equipment by entering into a capital lease.

Question:

A city acquires $1 million of public safety emergency communication equipment by entering into a capital lease. The city divides its ﬁrst rent payment of $ 135,868 between lease interest and lease principal as follows:
Lease interest ... $ 60,000
Lease principal . $ 75,868

The city comptroller is not sure how to report the lease payment on the government-wide statement of activities—speciﬁcally whether all, none, or a portion of the lease payment should be reported as a public safety expense. What is your advice?