EX$.7-1$

Select the best answer.

$1.$ Which of the following would be 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 would likely be fully depreciated.

b$.$ It would be 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 would be 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 position?

a$.$ Payments to a city artist to design a new city logo$.$

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 position?

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 net of assets and a general fund balance sheet

b$.$ Neither a government$-$wide statement of net position nor a general fund balance sheet

c$.$ A government$-$wide statement of net position but not a general fund balance sheet

d$.$ A general fund balance sheet but not a government$-$wide statement of net position

$6.$ 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 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 bridge $20$ years ago at a cost of $$30$ million. The replacement cost of the bridge today would be $$90$ million. The bridge has a useful life of $60$ years. In its government$-$wide statements the government should record the bridge at a value, net of accumulated depreciation, of

a$.$ $$20$ million

b$.$ $$60$ million

c$.$ $$90$ million

d$.$ $$0$

$9.$ 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 position but not in fund statements.

c$.$ Must be estimated and reported in the management$$s discussion and analysis.

d$.$ Need not be explicitly measured or reported when capital assets are depreciated.

$10.$ A city would probably not have to recognize an impairment loss on its hospital building if$.$

a$.$ It were severely damaged in a fire.

b$.$ It will likely be used to serve far fewer patients than expected when acquired.

c$.$ Its market value declines significantly.

d$.$ It will be transformed into a warehouse.