Both 5-21 and 5-22
und general journal and the governmental activities general journal to record the lease at the date of inception. b. W hich financial statement(s) prepared at the end of the first year would how both the asset and the liability related to this capital lease 21. Asset Impairment.(LO5-2) In the current year, the building occupied by Sun hine City's Culture and Recreation Department suffered severe structural damage as a result of a hurricane. It had been 48 years since a hurricane had hit the Sunshine City area, although hurricanes in Sunshine City's geographic area are not uncommon. The building had been purchased 10 years earlier at a cost of $2,000,000 and had accumulated depreciation of $500,000 as of the date of the hurricane. Based on a restoration cost analysis, city engineers estimate the impairment loss at $230,000; however, the city expects during the next fiscal year to receive insurance recoveries of $120,000 for the damage. Required a. Should the estimated impairment loss be reported as an extraordinary item? As a special item? Explain activities at the government-wide level (You need not provide the journal entry or entries here.) b. Record the estimated impairment loss in the journal for governmental c. How s hould the insurance recovery be reported in the following fiscal year? 5-22. Recording Capital Projects Fund Transactions. (LO5-4) In Fulbright County, the Culture and Recreation Department constructed a library in one of county's high-growth areas. The construction was funded by a number of sources. Below is selected information related to the Library Capital Project Il activity related to the library construction occurred within the current Fund. Al fiscal year. The county operates on a calendar-year basi 1. The county issued $6,000,000 of 4 percent bonds, with interest payable semiannually on January 1 and July I. The bonds sold for 101 on February 1. Proceeds from the bonds were to be used for construction of the library with all interest and premiums received to be used to service the debt issue 2. A $650,000 federal grant was received to help finance construction of the library 3. The Library Special Revenue Fund transferred $250,000 for use in construc- tion of the library 4. A construction contract was awarded in the amount of $6.800,000. 5. The library was completed four months ahead of schedule. Total construc tion expenditures for the library amounted to S6,890,000. When the project was completed, the cost of the library was allocated as follows: $200,000 to land, S6.295,000 to building, and the remainder to equipment 6. The capital projects fund temporary accounts were closed to Fund Balance- Restricted. The resources are restricted because they were obtained from bonded debt issued exclusively for library construction. The capital projects fund was closed by transferring remaining funds to the debt service fund for use in library construction debt repayment. Required governmental activities general journal at the government-wide I Make all necessary entries in the capital projects fund general journal and the
