3 questions

7-8 Positive revenue to expenditure ratios may not always be as favorable as they appear. In management's discussion and analysis accompanying its 2012 financial statements, Tiber County reported that "for the fifth consecutive year revenues exceeded expenditures." However, a note included in required supplementary infor- mation indicated the following: County Roads and Highways Comparison of Needed to Actual Maintenance/Preservation Costs (in thousands) Actual Needed 2012 $3,400 $4,200 2011 3,000 4,000 2010 2,900 3,000 2009 3,100 3,100 2008 2,800 2,700 The county has not been depreciating its infrastructure system. 1. What reservations might you have as to the significance of the county's excess of revenues over expenditures in 2012?mpore novor 2. Suppose that you were the county's indepen- dent auditor. What reservation might you have as to the county's reporting practices? 3. Suppose that the county is required to depre- ciate its roads. As of year-end 2012, the esti- mated initial cost of the roads is $100 million, and their estimated useful life is 40 years. How does the change from the modified approach to the standard approach affect the county's general fund excess of revenues over expenditures? How does it affect the county's government-wide statements