On January 1, 2010, a city entered into the following leases for equipment items. Each of the

Question:

On January 1, 2010, a city entered into the following leases for equipment items. Each of the leases qualifies as a capital lease. Initial payments are on December 31, 2010. An interest rate of 10 percent is viewed as appropriate. No bargain purchase options exist.

a. What balances should be reported on government-wide financial statements for December 31, 2010, and the year then ended?
b. What balances should be reported on fund-based financial statements for December 31, 2010, and the year thenended?

Financial Statements
Financial statements are the standardized formats to present the financial information related to a business or an organization for its users. Financial statements contain the historical information as well as current period’s financial...