A city entered into a general government capital lease for equipment on July 1, 20X7. The capitalizable

Fantastic news! We've Found the answer you've been seeking!

Question:

A city entered into a general government capital lease for equipment on July 1, 20X7. The capitalizable cost of the equipment was $400,000. A down payment of $40,000 was made. The next lease payment of $100,000 is due July 1, 20X8. The implicit rate of interest on the lease agreement is 10%. The amount of expenditures that the city should report in its General Fund statement of revenues, expenditures, and changes in fund balance for the year ended December 31, 20X7 is
A. $40,000.
B. $58,000.
C. $400,000.
D. $418,000.