Gov Exam 2 – Ch 5: General Capital Assets & Capital Projects Funds

Which of the following is true of depreciation expense on infrastructure assets in the government-wide statement of activities?

It must be reported unless a government adopts the modified approach.

The ______ on capital assets used in the operations of a government grant–financed program is often an allowable cost under the terms of a grant.

depreciation expense

Management of governments should maintain ______ for each asset, or group of related assets, that exceeds the minimum dollar capitalization threshold established by the government.

inventory record

In order to use the modified approach for eligible infrastructure assets, governments must provide documentation that complete condition assessments are made at least every ______ years.

3

GASB standards require that general capital assets be recorded at which of the following?

historical cost

Which of the following would be included in the entry to record the inception of a capital lease for the acquisition of general capital assets?

A credit to Other Financing Sources—Lease Agreements in the Special Revenue Fund for the present value of the lease payments

TRUE OR FALSE: If the requirements to use the modified approach to accounting for eligible infrastructure assets are met, all expenditures incurred to preserve the assets should be depreciated.

False

For which of the following reasons do governments enter into public-private and public-public partnerships?

To generate both revenue and cash flow from capital assets

Where should a loss due to an asset impairment be reported if the amount is not significant, unusual, or infrequently occurring?

recorded as a program expense in the government-wide statement of activities

Under which of the following arrangements does the government contract with an operator to provide public services by conveying control of the right to operate?

Public-private and public-public partnerships

A service concession arrangement is reported as

a deferred inflow recognized as revenue over the term of the arrangement

Accounting for governmental activities focuses on the inflows and outflows of

economic resources on the accrual basis

What is the accounting treatment of the premium on the bond issued?

The premium should be amortized using the effective interest method

When the interest rate on the general long-term debt remains lower than the interest rates that the government could earn on temporary investments of high quality, the management should do which of the following?

Sell bond as soon as possible