Question
The city council of the city of great falls decided to pool the investments of its general fund with those of great falls school district
The city council of the city of great falls decided to pool the investments of its general fund with those of great falls school district and great falls township, each of which carried its investments at fair value as of the prior balance sheet date. All investments are revalued to current fair value at the date of the creation of the pool. At that date, the prior and current fair value of the investments of each of the participants were as follows: Prior fair values: general fund 600,000; great falls school district 3,600,000; great falls township 1,800,000; total 6,000,000. Current fair values: general fund 590,000; Great falls school district 3,640,000; great falls township 1,770,000; total 6,000,000.
At the date of the creation of the investment pool, each of the participants should a. debit its fund balance account and credit its investments account for the prior fair value of the assets transferred to the pool. b. debit or credit its investments account as needed to adjust its carrying value to current fair value. the offsetting entry in each fund should be to fund balance. c. debt equity in pooled investments for the current fair value of investments pooled, credit investments for the prior fair value of investments pooled, and credit or debit revenues - change in fair value of investments for the difference. d. make a memorandum entry only.
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