Exam 5: Accounting for General Capital Assets and Capital Projects

Water rights purchased by a city would be considered an intangible asset.

The Town of Golden purchased a squad car for the police department.If the operations of the police department are financed by general revenues,which of the following is correct concerning where the capital asset would be recorded?

It is common practice for a portion of contractor payments to be withheld in the capital projects fund until final inspection and acceptance of the asset under construction has occurred.

Which of the following statements regarding capital assets is not ?

Which of the following would be considered a general capital asset?

If general capital assets are donated,revenue related to the donation is recognized in the governmental fund statement of revenue,expenditures and changes in fund balance.

The following items were included in Castle City's General Fund expenditures for the year ended June Personal computer for the city treasurer $ 6,000 Furniture for the mayor's office $ 20,000 How much should be classified as capital assets in Castle City's General Fund balance sheet at June 30?

Which of the following statements is correct concerning interest expenditures incurred during the period of construction of capital projects?

In late April,the Acme Construction Co.submitted a $1,200,000 progress billing on a construction contract.On May 2,the bill was approved for payment,subject to a ten percent retention,as provided by the contract.Construction expenditures should be debited when:

The acquisition of long-lived assets under an operating lease does not require any asset recognition in the accounts of any governmental fund.

How should a capital lease for a general capital asset be recorded in the General Fund accounts at the inception of the lease?

Which of the following activities or transactions would normally not be accounted for in a capital projects fund?

Under a service concession arrangement,a government transfers the rights and obligations of an asset to another legally separate governmental or private sector entity.

When part of a progress payment for construction is withheld until final settlement of the contract,what account is credited?

In late April,the Acme Construction Co.submitted a $1,200,000 progress billing on a construction contract.On May 2,the bill was approved for payment,subject to a ten percent retention,as provided by the contract.The amount that should be debited to Construction Expenditures is:

Prepare journal entries for the following related transactions in the fund and activity journals affected: 1.A capital projects fund issued $5,000,000,4 percent bonds for $5,050,000 to finance improvements of a park. Premiums received are to be used to service the debt issue. 2.The Parks and Recreation Special Revenue Fund transferred $250,000 for use in construction. 3.A construction contract was awarded in the amount of $5,200,000. 4. A bill was received from the contractor for $2,600,000. 5. The contractor's bill is paid. 5% retainage is withheld. 6.The park renovations were completed and the final bill of $2,600,000 was received. The contractor's bill and retainages are approved for payment in full.Total construction expenditures were allocated as follows: $5,000,000 to building,and the remainder to equipment. 7.The capital projects fund temporary accounts were closed,and the capital projects fund was closed by transferring remaining funds to the debt service fund for use in debt repayment.

Equipment that had been acquired several years ago by a special revenue fund at a cost of $40,000 was sold for $15,000 cash.Accumulated depreciation of $30,000 existed at the time of the sale.The journal entry to be made in the special revenue fund will include:

The following key terms from Chapter 5 relate to general capital assets and capital projects: A)Bond anticipation notes B)Infrastructure assets C)Service Concession Arrangements D)General capital assets E)Capital projects funds F)Asset impairment G)Capital leases H)Operating leases I) Depreciation For each of the following definitions,indicate the key term from the list above that best matches the definition by placing the appropriate letter in the blank space next to the definition. _____ 1. A rental-type lease in which the risks and benefits of ownership are primarily those of the lessor _____ 2. Short-term interest-bearing instruments issued by a government with a plan to replace with longer-term debt _____ 3. Roads,bridges,curbs and gutters,streets,sidewalks,and drainage systems installed for the common good _____ 4. Capital assets of a government that are not recorded in a proprietary or fiduciary fund _____ 5. Significant,unexpected decline in the service utility of a capital asset

Which of the following is regarding capital projects funds?

Acquisition of a general capital asset represents an expenditure in a governmental fund,but requires capitalization of an asset at the government-wide level.