1. What are the principal classes of capital assets associated with governmental activities that Vero Beach reports in the financial statements?

2. Some analysts use the accumulated depreciation amount reported for capital assets to assess roughly how close they are to needing replacement, which requires an outflow of financial resources, possibly financed by the incurrence of new debt. (Of course, other factors, such as changes in technology and programs, also contribute to replacement decisions.) Vero Beach uses straight-line depreciation. Based on the information reported in Table 7-1, which classes of capital assets are closest to needing replacement?

3. A fellow student looks at Table 7-1 and comments that Vero Beach must be substantially increasing its machinery and equipment, be- cause the amounts reported for ‘‘increases’’ are almost three times as high as those reported for ‘‘decreases.’’ Do you agree with his or her assessment? Explain.

Exploring Vero Beach’s Financial Report Refer to the City of Vero Beach’s capital asset disclosures in Table 7-1.