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Question(s) / Instruction(s):

     32.     (Preparation of government-wide financial statements - capital asset elements)

The following information is extracted from a city's government-wide statement of net assets at December 31, 2008:
               Capital assets               $2,000,000
               Accumulated depreciation, capital assets          $1,600,000
               Annual depreciation rate on capital assets          10 %
               Bonds payable               -0-

 

 


     
The following information is extracted from the city's governmental funds statement of revenues, expenditures, and changes in fund balances for the year ended December 31, 2009.
               Expenditures - capital outlay (General Fund)          $ 40,000
               Expenditures - capital outlay (Capital Projects Fund)     $600,000
               Expenditures - bond principal (Debt Service Fund)          $ 60,000
               Expenditures - bond interest (Debt Service Fund          $ 30,000
               Proceeds of debt (Capital Projects Fund)          $600,000

According to the notes to the financial statements, the city sold $600,000 of 5-year serial bonds on April 1, 2009, to finance the acquisition of capital assets. Principal is payable every six months, starting October 1, 2009. Interest of 5 percent per annum on the unpaid principal is also payable every six months, starting October 1, 2009.

Required:
          a.     Prepare journal entries so the foregoing information can be used in a work sheet to prepare government-wide financial statements for the year ended December 31, 2009.
          b.     Compute the amounts for the following statement elements as they will appear in the government-wide financial statements for the year ended December 31, 2009:
               1.     Depreciation expense (assume all assets acquired in 2009 were acquired July 1 and all have a 10-year life)
               2.     Interest expense
               3.     Capital assets
               4.     Accumulated depreciation, capital assets
               5.     Interest payable
               6.     Bonds payable
               7.     Net assets invested in capital assets, net of related debt

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