Why do you they subtract the book value of capital assets from the changes in fund balance besides having the explanation above because I don't understand it? Can please provide simple and step by step guide that's easier to understand than the above explanation.

In preparing Chase City's reconciliation of the Statement of Revenues, Expenditures, and Changes in fund balances to the Government-Wide Statement of Activities, which of the following items should be subtracted from the changes in fund balances? Capital Assets Purchases. Payment of long-term debt principal. Internal Service Fund increase in Net Position. Your Answer Book value of capital assets sold during the year. You Answered Correctly! At the Governmental-Fund level, the entire proceeds from the sale of capital assets is a financial resource of the fund - it is spendable. Only the gain or loss on the sale of capital assets is reported in the Government-Wide Financial Statements. Therefore, the book value of capital assets should be subtracted