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Exam 5: Accounting for General Capital Assets and Capital Projects

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Question 31

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

A) Maintaining sidewalks.
B) Building a parking garage.
C) Providing water and sewer services.
D) Servicing long-term debt.

E) None of the above
F) All of the above

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Question 32

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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:

A) A special assessment arrangement.
B) An infrastructure agreement.
C) A service concession arrangement.
D) A sale-leaseback agreement.

E) B) and C)
F) A) and D)

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Question 33

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GASB standards require that all governmental expenditures for long-lived assets be accounted for by a capital projects fund.

Capital assets used by governmental funds should be reported in:

The following general capital assets were owned by the Town of Otterville: What amount should be recorded as capital assets in the town's governmental activities accounts?

Water rights purchased by a city would be considered an intangible asset.

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:

Capital projects funds differ from the General Fund and special revenue funds in that the latter categories have a year-to-year life, whereas capital projects funds have a project-life focus.

It is common practice for a portion of contractor payments to be withheld in the capital projects fund until final inspection and acceptance of the asset under construction has occurred.

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:

The recorded premium on tax-supported bonds issued by a capital projects fund should be amortized at both the government-wide and fund levels.

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:

GASB standards require that general capital assets be recorded in the fund statements at:

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

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

General capital assets acquired with capital projects fund resources would be recorded in essentially the same manner as if they had been acquired by the General Fund.

If all asset, liability, and fund equity accounts of a capital projects fund were closed during a certain fiscal year, it is unnecessary to prepare any financial statements for that fund for that year.

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

If a city's General Fund acquires a new copier under a lease agreement: 1) The cost of the copier should be recorded in the ________ general journal(s). 2) The "cost" of the copier is computed as ________. 3) A governmental fund should record the cost of the copier as an Expenditure, offset by a credit to ________. 4) The liability for the lease should be recorded in the ________ general journal(s). 5) The liability should be computed as ________.

Streets, curbs, and sidewalks constructed or acquired through use of capital projects fund resources should never be reported in the financial statements of a government because they are for the use of the public, not for use by the government.