P. 7-1 June 30, Entries to record capital assets can be derived from the schedule of changes in capital assets. Assets acquired with federal funds pose an interesting accounting issue (albeit one not addressed in the text). Balance June 30, Additions Deletions Balance 2020 2021 Land $100,298,761 $8,575,641 $2,318,535 $106,555,867 Buildings 173,307,375 11,241,166 3,672,542 180,875,999 Improvements and 122,911,080 24,777,538 10,568,363 137,120,255 equipment Construction work in 44,449,433 6,209,591 11,769,183 38,889,841 process Infrastructure 345,554,452 43,600,000 10,500,280 378,654,172 Total historical cost $786,521,101 $85,828,295 $36,510.368 $842,096,134 Less accumulated depreciation for: Buildings and $ 26,893,189 $ 1,075,728 $ 2,530,000 $ 25,438,917 improvements Improvements and 49,164,432 12,690,135 4,380,320 57,474,247 equipment Infrastructure 160,550,000 8,638,861 2,100,676 167,088,185 Total accumulated $236,607,621 $22,404,724 $_9,010,996 $250,001,349. depreciation Capital assets, net $549,913,480 $63,423,571 $27,499,372 $592,094,785 A city included the schedule above in its financial statements. 1. Prepare entries to reflect the activity relating to improvements and equipment in both the general-fund and the government-wide statements, assuming, as appropriate, that all transactions were for cash. The deleted improvements and equipment were sold during the year for $12,000,000. 2. The schedule is based on numbers drawn from an actual city. What percentage of total assets, at historical cost (ignoring accumulated depreciation), represents infrastructure at year-end? Despite this sizable percentage, which is typical of most cities, what arguments have critics of GASB Statement No. 34 made in support of their contention that governments should not be required to give balance-sheet recognition to infrastructure assets? 3. A note to the schedule states that "the federal government funded a portion of the capital assets and thereby has an interest in them. This interest includes the right to approve the sale of such assets and to require the return to the federal government of a portion of any sales proceeds. Suppose that the government funded 50 percent of a law enforcement center that had a cost of $10 million and accumulated depreciation of $5 million, and thus had a book value of $5 million. During the year the government sold the center for $4 million and per the agreement with the federal government was required to return 50 percent of the sales proceeds to the government. Prepare a government-wide statement entry to record the sale. What reservations might you have with regard to this entry? Do you have any suggestions for an alternative way to account for federally funded assets? 4. Assume that the land on which the city's administrative offices are constructed was acquired in 1900 for $500. At what value would that land be reported today? Of what significance is that value to statement users