A police department leases a car on July 1, Year 1, with five annual payments of $20,000
Question:
a. The fund-based financial statements will show a total liability of $3,900 at the end of Year 1.
b. The government-wide financial statements will show a total liability of $58,000 at the end of Year 1.
c. The government-wide financial statements will show total interest expense of $2,900 in Year 1.
d. The fund-based financial statements will show total expenditures of $20,000 in Year 1.
e. The government-wide financial statements will show a net leased asset of $70,200 at the end of Year 1.
f. If this were an ordinary annuity so that the first payment was made in Year 2, no expenditure would be reported in the fund-based financial statements in Year 1.
g. If the car had an eight-year useful life, this contract could not be a capitalized lease.
h. Over the entire life of the car, the amount of expense recognized in the government-wide financial statements will be the same as the amount of expenditures recognized in the fund-based financial statements.
Financial Statements
Financial statements are the standardized formats to present the financial information related to a business or an organization for its users. Financial statements contain the historical information as well as current period’s financial... Annuity
An annuity is a series of equal payment made at equal intervals during a period of time. In other words annuity is a contract between insurer and insurance company in which insurer make a lump-sum payment or a series of payment and, in return,...
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Related Book For
Advanced Accounting
ISBN: 978-0077431808
10th edition
Authors: Joe Hoyle, Thomas Schaefer, Timothy Doupnik
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