Multiple Choice Questions
1. Which of the following is least likely to be classified as a city’s general capital assets?
a. Roads and bridges
b. Electric utility lines
c. Computers used by the police department
d. Computers used by the department that collects the city’s sale tax, which is dedicated to debt service on general obligation bonds
2. A city should not report on its general fund balance sheet an office building constructed over 100 years ago because
a. The building is likely to be fully depreciated
b. It is too difficult to determine the historical cost of the building as measured in current dollars
c. The measurement focus of the general fund is on current financial resources, and the building is not a current financial resource
d. The building is considered an infrastructure asset, and infrastructure assets are excluded from governmental funds
3. Which of the following costs should not be capitalized and reported on a city’s government wide statement of net assets?
a. Computer software that the city developed internally
b. Computer software that the city purchased from outsiders
c. Paintings acquired for display in the city’s art museum
d. Legal fees incurred in acquiring land to be used for a city park
4. Which of the following collectibles need not be capitalized and reported on a city’s government-wide statement of net assets?
a. A statue donated to the city, which it intends to sell and use the proceeds from the sale to fund a children’s art center
b. A series of books that the city intends to place in its library’s general circulation collection
c. An abstract painting that the city purchased to decorate the mayor’s office
d. An early twentieth-century Impressionist painting that the city’s art museum purchased for its permanent collection
5. Per GASB Statement No. 34, roads and bridges should be capitalized and reported as assets on
a. Both a government-wide statement of net of assets and a general fund balance sheet
b. Neither a government-wide statement of net assets nor a general fund balance sheet
c. A government-wide statement of net assets, but not a general fund balance sheet
d. A general fund balance sheet, but not a government-wide statement of net assets
6. Which of the following conditions does a government not have to satisfy to use the modified approach to reporting infrastructure assets?
a. It must assess the condition of its infrastructure at least once every three years
b. It must estimate the annual amount necessary to preserve the assets at a specified ‘‘condition level’’
c. It must document that the assets are, in fact, being preserved at or above the specified ‘‘condition level’’
d. it must use the modified approach for all of its infrastructure assets
7. Per the modified approach, a government need not
a. Capitalize infrastructure assets
b. Depreciate infrastructure assets
c. Report in its fund statements expenditures to acquire or construct infrastructure assets
d. Record maintenance costs as expenditures
8. A government constructed a bridge20 years ago but does not have reliable records of the cost. However, the cost to construct a comparable bridge today is $30 million. A bridge construction index has a value of 200 for today and a value of 80 for 20 years ago. The bridge has a useful life of 60 years. The government should record the bridge at a value, net of accumulated depreciation, of
a. $8 million
b. $12 million
c. $30 million
d. $75 million
9. Recognizing the difficulty of implementing the provisions of GASB Statement No. 34 pertaining to the retroactive capitalization of general infrastructure, the GASB
a. Exempted ‘‘small’’ governments from having to apply them
b. Gave all governments an additional six years from the effective date of Statement No. 34 to apply them
c. Exempted special purpose governments, such a. Public schools, from having to apply them
d. Permitted governments to capitalize general infrastructure only prospectively (i.e., only those assets constructed or acquired after the statement’s implementation date)
10. Per GASB Statement No. 34, deferred maintenance costs
a. Must be estimated and reported in notes to the financial statements
b. Must be reported in the government-wide statement of net assets, but not in fund statements
c. Must be estimated and reported in management’s discussion and analysis
d. Need not be explicitly measured or reported when capital assets are depreciated
Select the best answer.