Select the best response for each of the following questions.
1. Which of the following classifications of capital assets are sometimes not capitalized?
a. Land
b. Inexhaustible art collections
c. Construction in progress
d. Buildings
2. Which of the following is not a criterion of an inexhaustible collection?
a. Collection is held for public exhibition, education, or research.
b. Collection is protected, cared for, and preserved.
c. Collection is declared historical.
d. Collection is subject to policies that require proceeds for collection sales to be used to procure other items for the collection.
Questions 3 through 5 are based on the following information:
The City of Panther Creek owns a tract of land that was donated three years ago.
The land had an acquisition value of $250,000 when it was received; however, the current market value of the tract is $300,000. In addition, the city recently purchased 10 new police cars at a combined cost of $400,000. Their estimated useful life is 5 years. Finally, the city constructed a warehouse at a cost of $150,000. The warehouse has an anticipated useful life of 15 years.
3. Assuming the above facts and also assuming that all of the assets, including the warehouse, are for General Fund departments, the amount of depreciation expense that would be reported in the General Fund at the end of year one would be
a. $0.
b. $90,000.
c. $250,000.
d. $340,000.
4. At what value should the land be capitalized in the General Fund?
a. $0
b. $50,000
c. $250,000
d. $300,000
5. Assume that land and the vehicles are used for the General Fund departments, but the warehouse was actually constructed for the city's Enterprise Fund. The recorded value of the capitalized assets in the General Capital Asset accounts in the year of acquisition would be
a. $400,000.
b. $650,000.
c. $700,000.
d. $800,000.
Questions 6 through 9 are based on the following information:
To finance a general government construction project Nathan Township issued $10,000,000 face value general obligation bonds for $9,900,000. The township also incurred issuance costs equal to 2% of the face value. A Debt Service Fund will be used to account for repayment of the debt.
6. The Debt Service Fund liability that should be reported by Nathan Township in the year of the debt issuance would be
a. $0.
b. $9,700,000.
c. $9,900,000.
d. $10,000,000.
7. At the date of issue the Township's General Long-Term Liability accounts would reflect total liabilities for bonds payable liability of
a. $9,700,000.
b. $9,900,000.
c. $10,000,000.
d. $10,100,000.
8. In the year of debt issuance, the Capital Projects Fund would report Other Financing Sources in the amount of
a. $0
b. $9,700,000
c. $9,900,000
d. $10,000,000
9. In the year of debt issuance, the township would report unamortized bond issue costs in its government-wide Statement of Net Position of
a. $0
b. $100,000
c. $200,000
d. $300,000