Part 1: Write the following questions: 1. Why are general capital assets not recorded in governmental funds?
Question:
Part 1:
Write the following questions:
1. Why are general capital assets not recorded in governmental funds?
2. A state incurs interest on funds used while a highway was under construction. How will this interest be accounted for on the state’s (a) capital project’s fund statements and (b) government-wide statements?
3. How should governments report their long-lived assets in their government-wide financial statements?
Part 2:
General capital assets are accounted for differently in fund and government-wide financial statements. A city engaged in the following transactions during a year:
1. It acquired computer equipment at a cost of $40,000.
2. It completed construction of a new jail, incurring $245,000 in new costs. In the previous year the city had incurred $2.5 million in construction costs. The project was accounted for in a capital projects fund.
3. It sold for $16,000 land that it had acquired three years earlier for $28,000.
4. It traded in a four-year-old sanitation department vehicle for a new model. The old vehicle had initially cost $27,000, its carrying value at the time of trade was $17,000, and its market value was $13,000. The city paid additional $39,000 cash for the new model. The fair value of the new model was $52,000.
a. Prepare journal entries to reflect the transactions in an appropriate governmental fund (e.g., a general fund or a capital projects fund)
b. Prepare journal entries to reflect the transactions in the city’s government-wide statements.
Government and Not for Profit Accounting Concepts and Practices
ISBN: 978-1118155974
6th edition
Authors: Michael H. Granof, Saleha B. Khumawala