Governmental and Nonprofit Accounting (11th Edition)
11th Edition
ISBN: 9780133799569
Author: Robert J. Freeman, Craig D. Shoulders, Dwayne N. McSwain, Robert B. Scott
Publisher: PEARSON
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Textbook Question
Chapter 6, Problem 2.6E
Assume a governmental entity enters into a capital lease for the purchase of seven new public safety vehicles. The present value of the future minimum lease payments is $224,750, and a down payment of $25,000 is made at the inception of the lease. The net effect on fund balance of the General Fund in the year of inception is
- a. a decrease of $25,000.
- b. a decrease of $224,750.
- c. a decrease of $199,750.
- d. an increase of $224,750.
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1. Clavel County leases an office building with a remaining economic life of 20 years. The fair market value of the building is $6 million. Annual lease payments are agreed at $523,107, based on a 6 percent interest rate. The lease meets the conditions for a capital lease.Record the lease and the first year’s interest payment
(a) In a governmental fund
(b) In the government-wide statements
2. Should the office building be depreciated? If so, how and where should depreciation be recorded?
3. Suppose the lease did not meet the conditions for a capital lease. How and where should the lease be recorded? Should the office building be depreciated? If so, how and where should depreciation be reported?
1. Star City leased a bulldozer for use in activities accounted for in the General Fund. The City paid $30,000 and agreed to pay $30,000 per year for 3 years. The bulldozer has a useful life of six years. The lease qualified as a capital lease. Assuming that the city maintains is books and records in a manner that facilitates the preparation of the government-wide financial statements, the appropriate entry at the date of acquisition would be
a. Debit Expenditures $120,000; Credit Cash $30,000 and Other Financing Sources $90,000.
b. Debit Expenditures $40,000 and Prepaid Lease $80,000; Credit Cash $30,000 and Other Financing Sources $90,000.
c. Debit Equipment $120,000; Credit Cash $30,000 and Lease Payable $90,000.
d. Debit Expenditures $120,000; Credit Cash $30,000 and Lease Payable $90,000.
2. Star City leased a bulldozer for use in activities accounted for in the General Fund. The City paid $30,000 and agreed to pay $30,000 per year for 3 years. The bulldozer has a useful life of…
33) When a capital lease is used to lease fixed assets for the general government, the governmental fund acquiring the fixed assets debits ________ at the ________.
A) expenditures; future value of the lease payments
B) fixed assets; future value of the lease payments
C) expenditures; present value of the lease payments
D) fixed assets; present value of the lease payments
34) When recording an approved budget into the accounts of the general fund, which of the following accounts would be credited?
A) Appropriations
B) Encumbrances
C) Estimated revenues
D) Revenue collected in advance
35) When a city enters into a capital lease for a fixed asset for the general government,
A) government-wide statements will report the asset and liability for the leased asset.
B) government-wide statements will not report the liability, Capital Lease Obligation.
C) governmental fund statements will report a fixed asset.
D) governmental fund statements will report a liability, Capital Lease…
Chapter 6 Solutions
Governmental and Nonprofit Accounting (11th Edition)
Ch. 6 - Distinguish between an expenditure in the...Ch. 6 - Prob. 2QCh. 6 - On January 2, 20X1, materials costing 100 were...Ch. 6 - A city entered into a capital lease of equipment...Ch. 6 - Is a governments nonspendable fund balance in the...Ch. 6 - Prob. 6QCh. 6 - Prob. 7QCh. 6 - Prob. 8QCh. 6 - Prob. 9QCh. 6 - A government uses the purchases method to account...
Ch. 6 - Prob. 1ECh. 6 - Prob. 2.1ECh. 6 - Prob. 2.2ECh. 6 - An Expenditures account in a General Fund should...Ch. 6 - Both the periodic and perpetual inventory systems...Ch. 6 - Prob. 2.5ECh. 6 - Assume a governmental entity enters into a capital...Ch. 6 - Prob. 2.7ECh. 6 - Prob. 2.8ECh. 6 - (Various Entries) Record the following...Ch. 6 - (Capital Lease Entries) Record the following 20X8...Ch. 6 - Prob. 5ECh. 6 - (Purchases vs. Consumption Method) The city of...Ch. 6 - (Capital Outlay; InventoryPurchases Method) (a)...Ch. 6 - (Capital Outlay; InventoryConsumption Method) (a)...Ch. 6 - Record the following 20X9 transactions in the...Ch. 6 - Prob. 5PCh. 6 - (GL and SL EntriesErrors, Pensions, Changes,...Ch. 6 - Prob. 8PCh. 6 - Prob. 10PCh. 6 - Prob. 1CCh. 6 - Prob. 2CCh. 6 - Prob. 1CC
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