he city of Nancy is installing a lighting system in the Harvey Subdivision, which is considered to be a major general government capital project for the city. The system is being financed by levying $500,000 of special assessments on benefitted property owners and transferring $750,000 (in the next year) from the General Fund. $100,000 of these assessments were due and collected during the current year. Also, as of the end of the fiscal year, the city had incurred expenditures of $750,000 on the project.

Assume that instead of levying the special assessments to finance a portion of the project, the city levies the special assessments to pay for the notes payable issued in Item

8. Of the $500,000 of special assessments levied, $100,000 is due and collected during the first year.
What amount of special assessment revenues should be recognized in the Capital Projects Fund as of the end of the first fiscal year?

a. $0. The special assessments should be reported in a Debt Service Fund because collec- tions of the assessments are to be used to pay principal and interest on the notes payable.

b. $0. Special assessments should be reported as other financing sources, not as revenues.

c. $100,000.

d. $500,000.

e. None of the above.