Question

A governmental fund's Statement of Revenues, Expenditures, and Changes in Fund Balances reported expenditures for capital outlay in the amount of $5,000,000. Capital assets for that government cost $110,000,000, including $20,000,000 in land. Depreciable assets are amortized over 20 years, on average. The reconciliation from the governmental funds changes in fund balances to the governmental activities change in Net Position would reflect a(an): Group of answer choices Increase of $250,000. Decrease of $500,000. Decrease of $250,000. Increase of $500,000.

Answer 1

Answer:

Increase of $500,000

Explanation:

 For computing the change in fund balance first we have to compute the depreciation expense which is shown below:

= ($110,000,000 - $20,000,000) ÷ 20 years

= $4,500,000

And, the capital outlay amount is $5,000,000

So, the change in fund is

= $5,000,000 - $4,500,000

= $500,000

This amount reflect in increase in net position

Answer 2

Answer:

Increase of $500,000

Explanation:

Depreciation expense: ($110,000,000 - $20,000,000)/20 years

=$90,000,000/20 years

= $4,500,000

Capital outlay expenditures $5,000,000

Less Depreciation expense $4,500,000

Increase $500,000

Therefore the Net Position would reflect a(an) Increase $500,000