ACC 219 Chapter 5

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

$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:

$1,200,000

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

$26,000

The following balances are included in the subsidiary records of Sinclair: Town hall building $ 5,000,000 Town pool (supported by user fees) 1,000,000 Town pool maintenance equipment 25,000 Police cars 200,000 Equipment 75,000 Office supplies 10,000 What is the total amount of general capital assets held by the town?

$5,275,000.

The following balances are included in the subsidiary records of Carrollwood: Town hall building $ 500,000 Town 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?

$527,500

The following general capital assets were owned by the Town of Otterville: Town buildings $ 3,250,000 Intangible assets 1,000,000 Streets, sidewalks, and water lines 2,000,000 What amount should be recorded as capital assets in the town's governmental activities accounts?

$6,250,000

The City of Oak Park 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?

$900,000

Governments can opt not to capitalize collections or individual works of art or historical treasures if the collection is:

*All of the above* 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.

Maxim County just completed construction of a new town hall to be used for its governmental offices. The employees have moved in and the new building is officially in use. The county used a capital projects fund to account for the construction of the building, and the building came in under budget. There is a fund balance of $12,000. The county should:

*All of the above* Transfer the remaining funds to the debt service fund which will be handling the long-term debt incurred for the construction of the building. Transfer the remaining funds to the General Fund to pay operating expenses. Return the excess to the source of the restricted funding.

At the inception of a capital lease for equipment the journal entry required in the capital projects fund will include which of the following?

A credit to Other Financing Uses-Capital Leases.

Which of the following would be considered a general capital asset?

A vehicle purchased from General Fund revenues.

Callaway County issued $10,000,000 in bonds at 101 for the purpose of constructing a new County 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. The journal entry to record issuance of the bonds will require a (an):

Both Credit to Other Financing Sources—Proceeds of Bonds in the capital projects fund and Credit to Other Financing Sources—Premium on Bonds in the debt service fund are correct.

A capital projects fund might be used to account for which of the following activities?

Building a parking garage.

Which of the following is not a required disclosure about each major class of capital assets?

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

When a snowplow purchased by a government is received, it should be recorded in the governmental activities general journal as a(an):

Capital asset.

Centerville enters into a capital lease for new copiers in all its city hall offices. In the General Fund, it should report:

Capital expenditures equal to the capitalizable cost of the fixed asset regardless of the amount of lease payments made during the year.

In which of the following would it not be appropriate to record depreciation of capital assets?

Capital projects fund.

Which of the following is not true for capital projects funds?

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

Which of the following activities or transactions would normally not be accounted for in a capital projects fund?

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

When part of a progress payment for construction is withheld until final settlement of the contract, what account is credited?

Contracts Payable-Retained Percentage.

How should a capital lease for a general capital asset be recorded in the governmental activities accounts at the inception of the lease?

Credit to Capital Lease Obligations Payable. Debit to a capital asset account.

How should a capital lease for a general capital asset be recorded in the General Fund accounts at the inception of the lease?

Debit to a capital expenditure account.

Premiums received on tax-supported bonds are generally transferred to what fund?

Debt Service

Machinery and equipment depreciation expense for general capital assets totaled $163,000 for the reporting period. Which of the following correctly defines the recording of depreciation for general capital assets?

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?

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

Which of the following is true regarding capital projects funds?

Encumbrances accounting is employed.

Which of the following statements regarding capital assets is not true?

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

Two new copiers were purchased for use by the city clerk's office using General Fund resources. The copiers cost $15,000 each; the city's capitalization threshold is $5,000. Which of the following entries would be required to completely record this transaction

General Fund Debit Credit Expenditures 30,000 Vouchers Payable 30,000 Governmental Activities Equipment 30,000 Vouchers Payable 30,000

A general capital asset constructed several years ago by a capital projects fund was sold by the General Fund. Entries are necessary in the:

General Fund and governmental activities.

Four 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

Which of the following statements is correct concerning interest expenditures incurred during the period of construction of capital projects?

Interest expenditures may not be capitalized as part of the cost of general capital assets reported in governmental activities.

Which of the following statements is correct regarding depreciation?

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

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):

Other financing source.

The city of Deauville entered into a service concession arrangement (SCA) with Water Wonders, Inc. 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:

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

A capital projects fund would probably not be used for which of the following assets?

Replacing a bridge.

Which of the following is not a requirement that must be met to elect the "modified approach" to reporting certain eligible infrastructure assets?

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

Capital assets used by governmental funds should be reported in:

The governmental activities column of the government-wide statements.

Under GASB standards, which of the following would be considered an example of an intangible asset?

Water rights associated with the springs that supply the water to the lake.