New municipal building office equipment costs 400,000 and is being financed with a capital lease. If the government makes a 40,000 down payment, which of the following best describes the external financial reporting effects?
A. The General Fund statements will report expenditures of 400,000 and other financing sources of 360,000 . The General Long-Term Liabilities accounts will report a liability of 360,000 and the General Capital Assets accounts will report an asset of 400,000
B. The General Fund statements will report expenditures of 40,000 and other financing sources of 360,000 . The General Long-Term Liabilities accounts will report a liability of 400,000 and the General Capital Assets accounts will report an asset of 360,000
C. The General Fund statements will report expenditures of 360,000 and other financing sources of 400,000 . The General Long-Term Liabilities accounts will report a liability of 360,000 and the General Capital Assets accounts will report an asset of 360,000
D. The General Fund statements will report expenditures and other financing sources of 40,000 . The General Long-Term Liabilities accounts will report a liability of 360,000 and the General Capital Assets accounts will report an asset of 360,000
Question 2
Which of the following events could potentially qualify for reporting as an extraordinary item?
a. A city government sells city hall.
b. City Hall is hit by lightning and is significantly damaged by fire.
c. The city offers employees an early retirement incentive package and 15 employees accept the offer.
d. All of the above items would be reported as an extraordinary item.
e. Items a and c only.
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