ACC 219 Chapter 5

A government enters into a lease agreement for the purchase of a new snow plow. The present value of the future lease payments is $845,500 and there is a down payment at the inception of the lease of $25,000. The snow plow should be recorded in the General Fund at: Multiple Choice $25,000. $870,500. $845,500. $0.

$0.

During the year, a local merchant donated a building to the city of Stage Coach. The original cost of the building was $300,000. Accumulated depreciation at the date of the gift amounted to $250,000. The acquisition value of the donation at the date of the gift was $600,000. At what amount should Stage Coach record this donated property in the General Fund? Multiple Choice $50,000. $300,000. $600,000. $0.

$0.

The following items were included in Simple City's General Fund expenditures for the year ended June. Computers for the city treasurer's office$ 6,000 Furniture for the mayor's office$ 20,000 How much should be classified as capital assets in Simple City's General Fund balance sheet at June 30? Multiple Choice $0. $6,000. $20,000. $26,000.

$0.

In late April, the Acme Construction Co. submitted a $1,200,000 progress billing on a construction contract. On May 2, the bill was approved for payment, subject to a ten percent retention, as provided by the contract. The amount that should be debited to Construction Expenditures is: Multiple Choice $0. $12,000. $1,080,000. $1,200,000.

$1,200,000.

In 2023, Sunset City signed a contract in the amount of $8,000,000 for the construction of a new city hall. Expenditures were $4,000,000 in 2023 and $2,050,000 in 2024, which included a change to the original construction design in the amount of $50,000. What amount should be added to capital assets in the governmental activities accounts in 2024? Multiple Choice $0 $50,000 $2,050,000 $2,000,000

$2,050,000

The following items were included in Simple City's General Fund expenditures for the year ended June 30: Computer for the city treasurer's office$ 6,000 Furniture for the mayor's office$ 20,000 How much should be classified as capital assets in Simple City's government-wide statement of net position at June 30? Multiple Choice $0. $6,000. $20,000. $26,000.

$26,000.

The following balances are included in the subsidiary records of Thistlewood: Town hall building$ 500,000 Town swimming pool (supported by user fees)100,000 Police cars 20,000 Equipment 7,500 Office supplies 1,000 What is the total amount of general capital assets held by the town? Multiple Choice $527,500. $528,500. $627,500. $628,500.

$527,500.

The following general capital assets were owned by the Town of Clementville: Town buildings$ 3,250,000 Intangible assets1,000,000 Streets, sidewalks, and water lines 2,000,000 What amount should be recorded as capital assets in the town's governmental activities accounts? Multiple Choice $0. $3,250,000. $5,250,000 $6,250,000

$6,250,000

During the year, a local merchant donated a building to the City of Stage Coach. The original cost of the building was $300,000. Accumulated depreciation at the date of the gift amounted to $250,000. The acquisition value of the donation at the date of the gift was $600,000. At what amount should this contribution be recorded in the governmental activities accounts at the government-wide level? Multiple Choice $50,000. $300,000. $600,000. $0.

$600,000.

A government enters into a lease agreement for the purchase of a new snow plow. The present value of the future lease payments is $845,500 and there is a down payment at the inception of the lease of $25,000. The snow plow should be recorded in the government-wide statement of net position at: Multiple Choice $25,000. $870,500. $845,500. $0.

$870,500.

The City of Brown Creek constructed a new storage facility using the city's own public works employees. Construction costs were incurred in the amount of $900,000, plus $25,000 in interest on short-term notes used to finance construction. What amount should be capitalized in the government-wide statements? Multiple Choice $900,000. $925,000. $875,000. $0.

$900,000.

The City of Portage is building a new police station and has set up a capital products fund to account for the construction. All of the requirements and obligations related to the building have been fulfilled and the revenues and bond proceeds exceeded the expenditures. The entry to record this would include which of the following? Multiple select question. A credit to Fund Balance—Restricted in the Police Station Capital Projects Fund A credit to Fund Balance—Unrestricted in the Police Station Capital Projects Fund A debit to Fund Balance—Restricted in the Police Station Capital Projects Fund A credit to Construction Expenditures in the Police Station Capital Projects Fund

A credit to Fund Balance—Restricted in the Police Station Capital Projects Fund A credit to Construction Expenditures in the Police Station Capital Projects Fund

Equipment that had been acquired several years ago by a special revenue fund at a cost of $40,000 was sold for $15,000 cash. Accumulated depreciation of $30,000 existed at the time of the sale. The journal entry to be made in the governmental activities journal will include all of the following except: Multiple Choice A debit to Cash for $15,000. A debit to Accumulated Depreciation for $30,000. A credit to Equipment for $40,000. A credit to Other Financing Sources for $5,000.

A credit to Other Financing Sources for $5,000.

At the inception of a lease for equipment the journal entry required in the capital projects fund will include which of the following? Multiple Choice A debit to Equipment. A debit to Lease Expense. A credit to Obligations under Leases. A credit to Other Financing Sources—Lease Agreement.

A credit to Other Financing Sources—Lease Agreement.

The entry to record the inception of a capital lease for the acquisition of general capital assets would include which of the following? Multiple choice question. A credit to Other Financing Sources—Lease Agreements in the Government-wide activities A credit to Other Financing Sources—Lease Agreements in the Special Revenue Fund A debit to Equipment in the Special Revenue Fund A debit to Expenditures in the Government-wide activities

A credit to Other Financing Sources—Lease Agreements in the Special Revenue Fund

Which of the following would be included in the entry to record the inception of a capital lease for the acquisition of general capital assets? Multiple choice question. A credit to Other Financing Sources—Lease Agreements in the Special Revenue Fund for the acquisition cost of the capital assets A debit to Expenditures in the Government-wide activities for the present value of the lease payments A debit to Equipment in the Special Revenue Fund for the present value of the lease payments A credit to Other Financing Sources—Lease Agreements in the Special Revenue Fund for the present value of the lease payments

A credit to Other Financing Sources—Lease Agreements in the Special Revenue Fund for the present value of the lease payments

Equipment that had been acquired several years ago by a special revenue fund at a cost of $40,000 was sold for $15,000 cash. Accumulated depreciation of $30,000 existed at the time of the sale. The journal entry to be made in the special revenue fund will include: Multiple Choice A debit to Cash for $15,000. A debit to Accumulated Depreciation for $30,000. A credit to Equipment for $40,000. A credit to Other Financing Sources for $5,000.

A debit to Cash for $15,000.

When a government transfers the rights and obligations of an asset to another legally separate governmental or private sector entity, the transaction is referred to as: Multiple Choice A special assessment arrangement. An infrastructure agreement. A service concession arrangement. A sale-leaseback agreement.

A service concession arrangement.

Which of the following would be considered a general capital asset? Multiple Choice A vehicle purchased from General Fund revenues. A vehicle purchased and maintained by an enterprise fund. A computer purchased from revenues of an internal service fund and used by the supplies department. Real estate purchased with the assets of a pension trust fund.

A vehicle purchased from General Fund revenues.

Under GASB standards, intangible assets include Multiple Choice Computer software internally generated by government personnel. Water rights. Leased assets .All of the above.

All of the above.

Maxim County just completed construction of a new town hall. The employees have moved in, and the new building is officially in use. The county used a capital projects fund to account for construction of the building, which came in under budget. There is a fund balance of $12,000. The county should Multiple Choice Transfer the remaining funds to the General Fund to pay operating expenses. Transfer the remaining funds to the debt service fund that will be handling the long-term debt incurred for the construction of the building. Return the excess to the source of the restricted funding. All of the choices may be appropriate ways to treat the fund balance.

All of the choices may be appropriate ways to treat the fund balance.

Governments can opt not to capitalize collections or individual works of art or historical treasures if the collection is: Multiple Choice Held for public exhibition, education, or research in furtherance of public service rather than for financial gain. Protected, kept unencumbered, cared for, and preserved. Subject to an organizational policy that requires the proceeds from sales of collection items to be used to acquire other items for collections. All of the options are correct.

All of the options are correct.

How should a lease for a general capital asset be recorded in the governmental activities accounts at the inception of the lease? Multiple Choice Debit to a lease asset account. Debit to a capital expense/expenditure account. Credit to Lease Obligations Payable. Both Debit to a lease asset account and Credit to Lease Obligations Payable are correct.

Both Debit to a lease asset account and Credit to Lease Obligations Payable are correct.

A capital projects fund might be used to account for which of the following activities? Multiple Choice Maintaining sidewalks. Building a parking garage. Providing water and sewer services. Servicing long-term debt.

Building a parking garage.

Two new 3D printers were purchased for use by the city clerk's office using General Fund resources. The printers cost $25,000 each; the city's capitalization threshold is $5,000. Which of the following entries would be required to record this transaction?

C General Fund Expenditures 50,000 Vouchers Payable 50,000 Governmental Activities Equipment 50,000 Vouchers Payable 50,000

The City of Apple Creek issued bonds at par for the construction of a new city office building. Receipt of the bond proceeds would result in journal entries in which funds? Multiple Choice Capital Projects Fund: Yes; Debt Service Fund: No Capital Projects Fund: No; Debt Service Fund: Yes Capital Projects Fund: Yes; Debt Service Fund: Yes Capital Projects Fund: No; Debt Service Fund: No

Capital Projects Fund: Yes; Debt Service Fund: No

Which of the following is not a required disclosure about each major class of capital assets? Multiple Choice Beginning-of-year and end-of-year balances showing accumulated depreciation separate from historical cost. Capital acquisitions and sales or other dispositions during the year showing the date and method of acquisition or disposition. Depreciation expense for the current period with disclosure of the amounts charged to each function in the statement of activities. Disclosures describing works of art or historical treasures that are not capitalized and explaining why they are not capitalized.

Capital acquisitions and sales or other dispositions during the year showing the date and method of acquisition or disposition.

When a snowplow is purchased by a government, it should be recorded in the governmental activities general journal as a(an): Multiple Choice Expenditure. Capital asset. Appropriation. Expense.

Capital asset.

In which of the following would it not be appropriate to record depreciation of capital assets? Multiple Choice Capital projects fund. Internal service fund. Business-type activities. Governmental activities.

Capital projects fund.

Which of the following is not true for capital projects funds? Multiple Choice Capital projects funds use a Construction Work in Progress account to record costs until the project is completed. Encumbrance accounting is generally used. Capital projects funds use the modified accrual basis of accounting. Capital projects funds have a project-life focus.

Capital projects funds use a Construction Work in Progress account to record costs until the project is completed.

Identify which of the following should be capitalized as part of the asset. Multiple select question. City pool maintenance Change in equipment that increases its output Additions of a room to a building Costs of operating the city pool

Change in equipment that increases its output Additions of a room to a building

A capital projects fund would probably not be used for which of the following assets? Multiple Choice Construction and installation of new shelving in the mayor's office. Financing and construction of three new fire substations. Purchase and installation of an entity-wide integrated computer system. Replacing a bridge.

Construction and installation of new shelving in the mayor's office.

Which of the following activities or transactions would normally not be accounted for in a capital projects fund? Multiple Choice Construction of a new city jail. Construction of airport runways financed by revenue bonds and to be repaid from the revenues of the city airport, an enterprise fund. Lease of a building to be used as a city office building. Construction of a new city park to be maintained primarily from General Fund revenues

Construction of airport runways financed by revenue bonds and to be repaid from the revenues of the city airport, an enterprise fund.

A contractor has submitted a bill for $500,000 for the completion of a building included in a capital projects fund. The contract provided for a retention of 5% until the final inspection is completed. The entry to record payment includes a debit to which of the following?

Contracts Payable for $500,000

A contractor has submitted a bill for $500,000 for the completion of a building included in a capital projects fund. The contract provided for a retention of 5% until the final inspection is completed. The entry to record payment includes a credit to which of the following? Multiple choice question. Contracts Payable for $500,000 Construction Expenditures for $475,000 Contracts Payable—Retained Percentage for $25,000 Contracts Payable for $475,000

Contracts Payable—Retained Percentage for $25,000

When part of a progress payment for construction is withheld until final settlement of the contract, what account is credited? Multiple Choice Encumbrances. Appropriations. Contracts Payable—Retained Percentage. Construction Expenditures.

Contracts Payable—Retained Percentage.

Denali County issued $10,000,000 in bonds at 102 for the purpose of constructing a new recreation center. State law requires that any premium on bond issues be deposited directly in a debt service fund for eventual repayment of bond principal. Which of the following entries would be required in the Capital Projects Fund to record this transaction?

D Cash 10,000,000 Other Financing Sources—Proceeds of Bonds 10,000,000

How should a lease for a general capital asset be recorded in the General Fund accounts at the inception of the lease? Multiple Choice Debit to a lease asset account. Debit to a capital expenditure account. Credit to Lease Obligations Payable. Both Debit to a lease asset account and Credit to Lease Obligations Payable are correct.

Debit to a capital expenditure account.

Premiums received on tax-supported bonds are generally transferred to what fund? Multiple Choice Internal service fund. Debt service. General. Special revenue.

Debt service.

The cost of capital assets may be reduced by which of the following? Multiple select question. Repairs and maintenance of a capital asset that do not qualify as betterments Demolition of an identifiable portion of the asset The transfer of an asset from the governmental activities ledger to an enterprise fund

Demolition of an identifiable portion of the asset The transfer of an asset from the governmental activities ledger to an enterprise fund

Which of the following statements regarding the recording of depreciation for general capital assets is true? Multiple Choice Depreciation expenditures should be debited and accumulated depreciation should be credited. Depreciation expenses should be debited and the general capital assets should be credited. Depreciation expense is allocated and recorded at the government-wide level with a debit to the functions or programs of government and a credit to accumulated depreciation. Because depreciation does not involve the use of financial resources, it is not necessary for the government to record it at the fund level or government-wide level.

Depreciation expense is allocated and recorded at the government-wide level with a debit to the functions or programs of government and a credit to accumulated depreciation.

Which of the following is a correct statement regarding the use of the modified approach for accounting for eligible infrastructure assets? Multiple Choice Only intangible infrastructure assets qualify for the modified approach. Depreciation on eligible infrastructure assets need not be recorded if the assets are being maintained at or above the established condition level. The government must file paperwork with the GASB to document that it is maintaining eligible assets at the established condition level. All of the choices are correct statements.

Depreciation on eligible infrastructure assets need not be recorded if the assets are being maintained at or above the established condition level.

Which statement regarding capital projects funds is correct? Multiple choice question. The combining financial statements in the supplementary information provided for nonmajor funds shows the nonmajor funds reported in one column. Combining financial statements for nonmajor funds generally are a part of the auditor's examination. Each capital projects fund that meets the definition of a major fund must be reported in a separate column of the balance sheet.

Each capital projects fund that meets the definition of a major fund must be reported in a separate column of the balance sheet.

Which of the following is true regarding capital projects funds? Multiple Choice Encumbrances accounting is generally employed. Encumbrances accounting is not normally employed, but Appropriations are recorded. No budgetary accounts are used. All budgetary accounts are employed and budget to actual statements are prepared.

Encumbrances accounting is generally employed.

Which of the following are criteria for outlays that may be capitalized as part of a capital asset? Multiple select question. Enhances the value of an integral part of the asset Provides revenue as a result of use of the asset Exceeds 20% of the value of the asset Clearly adds to the utility or function of the asset

Enhances the value of an integral part of the asset Clearly adds to the utility or function of the asset

Neighborville enters into a lease agreement for new copiers in all its city hall offices. In the General Fund at the inception of the lease, it should record Multiple Choice Leased equipment balances equal to the lease payments made during the year. Expenditures equal to the initial lease payment. Leased equipment balances equal to the capitalizable cost of the lease assets regardless of the amount of lease payments made during the year. Expenditures equal to the capitalizable cost of the lease asset regardless of the amount of lease payments made during the year.

Expenditures equal to the capitalizable cost of the lease asset regardless of the amount of lease payments made during the year.

True or false: General capital assets may be specifically associated with activities financed by proprietary and fiduciary funds.

False

Which of the following statements regarding capital assets is not true? Multiple Choice Proprietary funds routinely account for capital assets used in their operations within the fund financial statements. Fiduciary funds do not account for property, plant, and equipment within the fund financial statements. Because governmental funds account only for current financial resources, these funds do not record capital assets acquired by the funds. General capital assets purchased or constructed with governmental fund resources are recorded in the governmental activities general ledger at the government-wide level.

Fiduciary funds do not account for property, plant, and equipment within the fund financial statements.

If after the completion of a capital projects fund, there is a large deficit, the government could do which of the following? Multiple select question. Authorize transfers from one or more other funds regardless of the amount of the deficit Finance the deficit by issuing debt in whatever form is legally possible and feasible Seek additional grants from other governments to cover the deficit if it is relatively large

Finance the deficit by issuing debt in whatever form is legally possible and feasible Seek additional grants from other governments to cover the deficit if it is relatively large

If funds are left over when a capital project is complete, which of the following is correct? Multiple choice question. Encumbrances is debited and Other Financing Uses—Interfund Transfers Out is credited Fund Balance—Unrestricted is debited and Other Financing Uses—Interfund Transfers Out is credited Fund Balance—Restricted is debited and Construction Expenditures is credited Fund Balance—Restricted is debited and Other Financing Uses—Interfund Transfers Out is credited

Fund Balance—Restricted is debited and Other Financing Uses—Interfund Transfers Out is credited

A general capital asset constructed several years ago by a capital projects fund was sold for cash by the General Fund. Entries are necessary in the: Multiple Choice General Fund only. General Fund and the capital projects fund. General Fund and governmental activities. Governmental activities only.

General Fund and governmental activities.

The Town of Orleans purchased a truck for the parks department. If the operations of the parks department are financed by general revenues, which of the following is correct concerning where the capital asset would be recorded? Multiple Choice General Fund: No; Governmental Activities: Yes General Fund: No; Governmental Activities: No General Fund: Yes; Governmental Activities: No General Fund: Yes; Governmental Activities: Yes

General Fund: No; Governmental Activities: Yes

Six new computers, for which the cost exceeded the city's capitalization threshold, were purchased for use in the city clerk's office using General Fund resources. Which of the following entries would be required to completely record this transaction?

General Journal Debit Credit General Fund: Expenditures 8,000 Vouchers Payable 8,000 Governmental Activities: Equipment 8,000 Vouchers Payable 8,000

Select the correct statement regarding capital projects funds. Multiple choice question. Each capital projects fund that meets the definition of a nonmajor fund must be reported in a separate column of the balance sheet. Governments are required to provide as supplementary information combining financial statements for all major funds. Governments are encouraged to provide as supplementary information combining financial statements for all nonmajor funds. Governments are required to provide as supplementary information combining financial statements for all nonmajor funds.

Governments are encouraged to provide as supplementary information combining financial statements for all nonmajor funds.

GASB standards require that general capital assets be recorded in the government-wide statements at: Multiple Choice Historical cost. Fair value at the financial statement date. Estimated cost at the financial statement date. None of the options are correct.

Historical cost.

Which of the following statements is correct concerning interest incurred during the period of construction of capital projects? Multiple Choice Interest cannot be capitalized as part of the cost of general capital assets reported in governmental activities. Interest should be capitalized as part of the cost of general capital assets reported in the governmental activities accounts at the government-wide level. Interest must be capitalized as part of the cost of general capital assets reported in the capital projects fund. The capitalization of interest as part of the cost of general capital assets reported in the capital projects fund is optional.

Interest cannot be capitalized as part of the cost of general capital assets reported in governmental activities

Neighborville enters into a lease agreement for new copiers in all its city hall offices. In the governmental activities journal at the inception of the lease, it should record Multiple Choice Leased equipment balances equal to the lease payments made during the year. Capital expenses equal to the initial lease payment. Leased equipment balances equal to the capitalizable cost of the lease assets regardless of the amount of lease payments made during the year. Capital expenses equal to the capitalizable cost of the lease asset regardless of the amount of lease payments made during the year.

Leased equipment balances equal to the capitalizable cost of the lease assets regardless of the amount of lease payments made during the year.

Which of the following statements is correct regarding depreciation? Multiple Choice Depreciation expense should be recorded in the appropriate governmental funds, and recorded in the governmental activities accounts. Depreciation expense must be recorded in the governmental fund, but no depreciation expense is recorded in the governmental activities accounts. No depreciation can be recorded in any governmental fund, but depreciation expense must be recorded in the governmental activities accounts No depreciation can be recorded in any governmental fund, nor is it permissible to record depreciation expense in the governmental activities accounts.

No depreciation can be recorded in any governmental fund, but depreciation expense must be recorded in the governmental activities accounts

GASB standards require that general capital assets be recorded in the fund statements at: Multiple Choice Historical cost. Fair value at the financial statement date. Estimated cost at the financial statement date. None of the options are correct.

None of the options are correct.

Transfers from the General Fund to the capital projects fund to provide partial financing of a capital project would be reported by the capital projects fund as a(an): Multiple Choice Fund balance addition. Revenue. Other financing source. Current liability.

Other financing source.

Proceeds of debt issues may be recorded as which of the following? Multiple choice question. Proceeds of Bonds or Long-term Notes Interfund Transfers Revenues in the Other Financing Sources section

Proceeds of Bonds or Long-term Notes

The City of Deauville entered into a service concession arrangement (SCA) with Water Wonders, Incorporated, to operate the city pool for the next 20 years. Water Wonders has agreed to pay the city $3,000,000 up front as a part of this agreement. According to the agreement, Water Wonders will be responsible for operating the pool, and the city will continue to be responsible for costs related to maintaining it. In addition, Water Wonders has the right to collect fees from the public for their use of the pool, although the rates are subject to approval by the city. The city should Multiple Choice Remove the cost of the pool and the related accumulated depreciation from its records because it has effectively transferred the asset to Water Wonders. Record the receipt of the cash payment, a liability for the present value of the cost of required future maintenance, and a deferred inflow of resources for the difference between the cash payment and the liability. Record the payment as a cash receipt and as an other financing source. Set up a proprietary fund to record all transactions related to the SCA.

Record the receipt of the cash payment, a liability for the present value of the cost of required future maintenance, and a deferred inflow of resources for the difference between the cash payment and the liability.

Identify the major differences in how activities are recorded in the capital projects fund and the governmental activities general ledger. Multiple select question. Resource outflows are recorded as expenditures in the capital projects fund and as construction work in progress in governmental activities. Resource outflows are recorded as expenditures in governmental activities and as construction work in progress in the capital projects fund. Resource inflows are recorded as other financing sources in the capital projects fund and as liabilities in governmental activities. Resource inflows are recorded as other financing sources in governmental activities and as liabilities in the capital projects fund.

Resource outflows are recorded as expenditures in the capital projects fund and as construction work in progress in governmental activities. Resource inflows are recorded as other financing sources in the capital projects fund and as liabilities in governmental activities.

A government experienced significant loss of certain roadways and bridges as a result of major flooding. Which of the following estimation approaches would be most useful in estimating the amount of asset impairment that has occurred? Multiple Choice Deflated depreciated replacement cost approach. Service units approach. Restorative cost approach. Each of these three approaches would be equally useful.

Restorative cost approach.

Events that reduce the recorded cost of capital assets include which of the following? Multiple select question. Retirements Sales General maintenance Theft or loss

Retirements Sales Theft or loss

If after the completion of a capital projects fund, there is a residual fund balance, how may the residual be accounted for? Multiple select question. Returned to the source of the restricted funding Transferred to the fund that is to service the debt if long-term debt has been incurred for the purpose of the capital projects fund Transferred to the General Fund to pay operating expenses Left in the capital projects fund to pay for any long-term debt or further operating expenses

Returned to the source of the restricted funding Transferred to the fund that is to service the debt if long-term debt has been incurred for the purpose of the capital projects fund Transferred to the General Fund to pay operating expenses

In late April, the Acme Construction Co. submitted a $1,200,000 progress billing on a construction contract. On May 2, the bill was approved for payment, subject to a ten percent retention, as provided by the contract. Construction expenditures should be debited when: Multiple Choice The bill is approved for payment. The contract is signed. The bill is paid (except for the ten percent retention). The final ten percent of the bill is paid.

The bill is approved for payment.

To offset engineering and design costs incurred prior to the issuance of a long-term bond issue, a capital projects fund borrowed the sum of $75,000 on a short-term basis from First National Bank. This transaction should be recorded in: Multiple Choice The capital projects fund. The debt service fund. The special revenue fund. None of the options are correct. Debt is not recorded in governmental funds.

The capital projects fund.

Which of the following is not a requirement that must be met to elect the modified approach to reporting certain eligible infrastructure assets? Multiple Choice The government gets the permission of the Government Accounting Standards Board. The government documents that the eligible infrastructure assets are being preserved approximately at (or above) the condition level established and disclosed. The government manages the assets using an asset management system that includes condition assessments of the assets and summary of results using a measurement scale. The government manages the assets using an asset management system that includes estimates each year of the annual amount needed to maintain and preserve the eligible assets at the condition level established and disclosed by the government.

The government gets the permission of the Government Accounting Standards Board.

A city recorded an asset impairment to a public works facility. Which of the following is correct concerning the recording of the amount of the asset impairment? Multiple Choice The General Fund would record a debit to Expenditures. The General Fund would record a debit to Other Financing Uses—Loss due to Impairment. The governmental activities accounts would record a debit to Loss due to Impairment. The governmental activities accounts would record a debit to Expenses—Public Works.

The governmental activities accounts would record a debit to Expenses—Public Works.

Capital assets used by governmental funds should be reported in: Multiple Choice The appropriate governmental funds. The property, plant, and equipment fund. Departmental memorandum records. The governmental activities column of the government-wide statements.

The governmental activities column of the government-wide statements.

When bonds are issued at a premium in states that require initial issue premiums to be used for debt service, which of the following is correct? Multiple choice question. Both the par value and premium are recorded in the capital projects fund. The par value is recorded in the capital projects fund and the premium is recorded in the debt service fund. Both the par value premium are recorded in the debt service fund.

The par value is recorded in the capital projects fund and the premium is recorded in the debt service fund.

Under a service concession arrangement: Multiple Choice The transferring government continues to report the transferred asset as a capital asset and any related contractual obligations as liabilities. The operating government will record the transferring government's payment or receivable, a liability for the present value of significant contractual obligations and a corresponding deferred inflow of resources for the difference between the two. Any deferred inflow of resources is recognized as revenue at the time the arrangement takes place. All of the given statements are true.

The transferring government continues to report the transferred asset as a capital asset and any related contractual obligations as liabilities.

Which of the following is true of capital assets that are not being depreciated? Multiple choice question. They are not disclosed. They are disclosed along with assets that are being depreciated. They are disclosed separately from assets being depreciated.

They are disclosed separately from assets being depreciated.

Which of the following is true of works of art or historical treasures? Multiple choice question. They do not have to be capitalized if they are held for public exhibition, education, or research. They do not have to be capitalized if the proceeds of them can be used to acquire general capital assets. They must be capitalized.

They do not have to be capitalized if they are held for public exhibition, education, or research.

True or false: An asset impairment can occur due to a change in the manner or duration of an asset's use.

True

True or false: Judgments levied from damage suits in connection with land acquisition are considered capital costs of the property acquired.

True

A capital project financed through general obligation debt should be ______. Multiple choice question. accounted for in the general fund accounted for in a special revenue fund accounted for in a debt service fund accounted for in a capital projects fund

accounted for in a capital projects fund

Donated general capital assets are recorded at which of the following? Multiple choice question. historical cost acquisition value fair market value estimated cost

acquisition value

Service concession arrangements ______. Multiple choice question. may only be entered into between two legally separate government entities may have a negative impact on the efficiency of public services are used to generate revenues and cash flows from capital assets

are used to generate revenues and cash flows from capital assets

The GASB defines an ______ as a significant, unexpected decline in the service utility of a capital asset. Multiple choice question. asset impairment asset improvement asset disposal

asset impairment

Bond issue premiums should ______. Multiple choice question. be amortized over the life of the bond using the straight-line method be amortized over the life of the bond using the effective-interest method be treated as other financing sources not subject to amortization

be amortized over the life of the bond using the effective-interest method

A government may postpone a bond sale until a large portion of the proceeds is needed or in the case where all of the details connected with a bond issuance are not known. These temporary financing arrangements are called ______. Multiple choice question. bond appreciation notes retained percentages bond anticipation notes

bond anticipation notes

General capital assets should be distinguished from capital assets specifically associated with activities financed by which type of funds? Multiple choice question. proprietary only fiduciary only neither proprietary nor fiduciary both proprietary and fiduciary

both proprietary and fiduciary

A special assessment or local improvement district is sometimes formed by a group of property owners to facilitate a(n) ______. Multiple choice question. service concession arrangement capital improvement project asset impairment

capital improvement project

Accounting for a governmental fund focuses on the inflows and outflows of ______. Multiple choice question. economic resources on the modified accrual basis current financial resources on the accrual basis current financial resources on the modified accrual basis

current financial resources on the modified accrual basis

Accounting for governmental activities focuses on the inflows and outflows of ______. Multiple choice question. current financial resources on the modified accrual basis current financial resources on the accrual basis economic resources on the accrual basis

economic resources on the accrual basis

GASB standards required that general capital assets be recorded at which of the following? Multiple choice question. acquisition value estimated cost historical cost fair market value

historical cost

Historically, interest rates payable on general long-term debt were often ______ than interest rates that the government could earn on temporary investments of high quality. Multiple choice question. higher lower

lower

Capital projects funds differ from both general and special revenue funds because they have a ______. year-to-year life focus permanent life focus project-life focus

project-life focus

When financing a capital projects fund, governments typically ______. Multiple choice question. invest in U.S. Treasury bills and notes invest in government bonds with short maturities wait as long as possible to sell bonds sell bonds as soon as possible

sell bonds as soon as possible

A government transfers the rights and obligations of an asset to another legally separate governmental or private sector entity in a(n) ______. Multiple choice question. residual equity agreement service concession arrangement asset impairment

service concession arrangement

Proceeds of debt issues for a capital projects fund should be recognized at the time the issue is ______. Multiple choice question. authorized sold

sold

A(n) ______ is a compulsory levy made against certain property to defray part or all of the cost of a specific improvement or service that is of particular benefit to the assessed property. Multiple choice question. bond anticipation note asset impairment capital lease special assessment

special assessment

The cost of land acquired by a government through purchase should include which of the following? Multiple select question. taxes and other liens assumed title search costs appraised value fair market value the contract price

taxes and other liens assumed title search costs the contract price

The liability for bond anticipation notes should be treated as a long-term liability if ______. Multiple choice question. most of the legal steps have been taken to refinance the bond anticipation notes the intent is supported by an ability to consummate financing the short-term notes on a long-term basis

the intent is supported by an ability to consummate financing the short-term notes on a long-term basis