Wartrace Citys Communications Enterprise Fund, which has a December 31 year end,

was awarded a $400,000 federal grant for a system hardware upgrade to meet FCC

requirements. The grant was awarded in June 20X7. Work began immediately on the

project and qualifying costs of $200,000 were incurred prior to December 31, 20X7,

however, the capital project is not expected to be completed until June 20X8. The grantor

does not reimburse grantees until a project is complete. As of December 31, 20X7, the

Communications Enterprise Fund should