ExpertHard1 markMultiple Choice
CPA · Question 48 · Area 4: State and Local Governments
In the Government-Wide Statement of Net Position, how should capital assets used in general government activities be reported?
In the Government-Wide Statement of Net Position, how should capital assets used in general government activities be reported?
Answer options:
A.
As expenditures in the period purchased.
B.
Not reported.
C.
At historical cost without depreciation.
D.
At historical cost net of accumulated depreciation.
How to approach this question
Distinguish: Fund Statements (Modified Accrual) = Expenditure. Gov-Wide Statements (Full Accrual) = Capitalize & Depreciate.
Full Answer
D.At historical cost net of accumulated depreciation.✓ Correct
D
The Government-Wide financial statements use the economic resources measurement focus and full accrual basis. Therefore, capital assets are capitalized and depreciated, unlike in the Governmental Fund statements where they are expenditures.
Common mistakes
Confusing Fund statements with Gov-Wide statements.
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