Choose the best answer. 

1. Under GASB standards, intangible assets include

a. Computer software internally generated by government personnel.

b. Water rights.

c. Leased assets.

d. All of the above.

2. Two new 3D printers were purchased for use by the city clerk’s office using General Fund resources. The printers cost $25,000 each; the city’s capitalization threshold is $5,000. Which of the following entries would be required to record this transaction?

3. Maxim County just completed construction of a new town hall. The employees have moved in, and the new building is officially in use. The county used a capital projects fund to account for construction of the building, which came in under budget. There is a fund balance of $12,000. The county should

a. Transfer the remaining funds to the General Fund to pay operating expenses.

b. Transfer the remaining funds to the debt service fund that will be handling the long-term debt incurred for the construction of the building.

c. Return the excess to the source of the restricted funding.

d. All of the above may be appropriate ways to treat the fund balance.

4. A capital projects fund would probably not be used for which of the following assets?

a. Construction and installation of new shelving in the mayor’s office.

b. Financing and construction of three new fire substations.

c. Purchase and installation of an entity-wide integrated computer system. d. Replacing a bridge.

5. Which of the following statements regarding the recording of depreciation for general capital assets is true?

a. Depreciation expenditures should be debited and accumulated depreciation should be credited.

b. Depreciation expenses should be debited and the general capital assets should be credited.

c. Depreciation expense is allocated and recorded at the government-wide level with a debit to the functions or programs of government and a credit to accumulated depreciation.

d. Because depreciation does not involve the use of financial resources, it is not necessary for the government to record it at the fund level or government-wide level.

6. Which of the following is a correct statement regarding the use of the modified approach for accounting for eligible infrastructure assets?

a. Only intangible infrastructure assets qualify for the modified approach.

b. Depreciation on eligible infrastructure assets need not be recorded if the assets are being maintained at or above the established condition level.

c. The government must file paperwork with the GASB to document that it is maintaining eligible assets at the established condition level.

d. All of the above are correct statements.

7. The City of Deauville entered into a service concession arrangement (SCA) with Water Wonders, Inc., to operate the city pool for the next 20 years. Water Wonders has agreed to pay the city $3,000,000 up front as a part of this agreement. According to the agreement, Water Wonders will be responsible for operating the pool, and the city will continue to be responsible for costs related to maintaining it. In addition, Water Wonders has the right to collect fees from the public for their use of the pool, although the rates are subject to approval by the city. The city should

a. Remove the cost of the pool and the related accumulated depreciation from its records because it has effectively transferred the asset to Water Wonders.

b. Record the receipt of the cash payment, a liability for the present value of the cost of required future maintenance, and a deferred inflow of resources for the difference between the cash payment and the liability.

c. Record the payment as a cash receipt and as an other financing source.

d. Set up a proprietary fund to record all transactions related to the SCA.

8. Denali County issued $10,000,000 in bonds at 102 for the purpose of constructing a new recreation center. State law requires that any premium on bond issues be deposited directly in a debt service fund for eventual repayment of bond principal. Which of the following entries would be required in the Capital Projects Fund to record this transaction? 

9. Neighborville enters into a lease agreement for new copiers in all its city hall offices. In the General Fund at the inception of the lease, it should record

a. Leased equipment balances equal to the lease payments made during the year.

b. Expenditures equal to the initial lease payment.

c. Leased equipment balances equal to the capitalizable cost of the lease assets regardless of the amount of lease payments made during the year.

d. Expenditures equal to the capitalizable cost of the lease asset regardless of the amount of lease payments made during the year.

10. Neighborville enters into a lease agreement for new copiers in all its city hall offices. In the governmental activities journal at the inception of the lease, it should record

a. Leased equipment balances equal to the lease payments made during the year.

b. Capital expenses equal to the initial lease payment.

c. Leased equipment balances equal to the capitalizable cost of the lease assets regardless of the amount of lease payments made during the year.

d. Capital expenses equal to the capitalizable cost of the lease asset regardless of the amount of lease payments made during the year. 

11. The following balances are included in the subsidiary records of Sinclair: 

What is the total amount of general capital assets held by the town? 

a. $5,275,000.

b. $5,285,000.

c. $6,275,000.

d. $6,285,000.

12. Equipment that had been acquired several years ago by a special revenue fund at a cost of $40,000 was sold for $15,000 cash. Accumulated depreciation of $30,000 existed at the time of the sale. The journal entry to be made in the special revenue fund will include

a. A credit to Gain on Sale of Equipment.

b. A debit to Accumulated Depreciation.

c. A credit to Equipment.

d. A credit to Other Financing Sources—Proceeds of Sale of Assets.

13. In the Governmental Activities column of the government-wide statement of net position, Bond Anticipation Notes (BANs) are recorded as

a. Short-term liabilities.

b. Long-term liabilities.

c. An other financing source.

d. Either short-term or long-term liabilities depending upon the intent of the government to refinance the liability.

14. Brighton purchased a parcel of land adjoining its city park for $1. The land should be recorded in the governmental activities journal at

a. Its purchase price of $1.

b. Its acquisition value.

c. Its fair value.

d. Its appraised value.

15. Cubs County built a minor league baseball stadium with a 30-year estimated useful life five years ago. Major league baseball eliminated several minor league baseball teams, including the tenant of Cubs County stadium. Which of the following should be considered in determining whether an impairment exists?

a. No other uses have been identified for the stadium.

b. There is no evidence to suggest that the reduction in rental of the stadium will be temporary.

c. Cubs County would not have made this large an investment if it did not expect to have a major league tenant for the life of the stadium.

d. All of the above are factors in determining impairment.

Transcribed Image Text:

a. General Fund Equipment......... Vouchers Payable.. b. Governmental Activities Expenses............ Vouchers Payable.. c. General Fund Expenditures...... Vouchers Payable........ Governmental Activities Equipment. Vouchers Payable... d. General Fund Equipment Vouchers Payable.. Governmental Activities Equipment. Vouchers Payable.. Debits 50,000 50,000 50,000 50,000 50,000 50,000 Credits 50,000 50,000 50,000 50,000 50,000 50,000