Which of the following reconciling items would be SUBTRACTED from the Net Change in Fund Balance of Governmental Funds to arrive at the Change in Net Position of Governmental Activities in the government-wide statement of activities?

Think: Fund = Modified Accrual (Expenditures). Gov-wide = Full Accrual (Expenses). <br/>1. Capital Outlay: Fund expensed it. Gov-wide capitalizes it. ADD back to income.<br/>2. Depreciation: Fund ignored it. Gov-wide expenses it. SUBTRACT from income.<br/>3. Debt Proceeds: Fund called it Source (Income-like). Gov-wide calls it Liability. SUBTRACT from income.<br/>4. Debt Principal: Fund expensed it. Gov-wide reduces liability. ADD back to income.