[shawnl112]

A government’s assets include inventory of $2 million, roads constructed for $25 million with accumulated depreciation of $10 million, and equipment acquired for $5 million with accumulated depreciation of $1 million. Its liabilities include an outstanding balance of 5 million for bonds payable issued to construct the roads and a $1 million short-term loan for inventory purchases. What amount should be reported as the net investment in capital assets in the government-wide statement of net position?

a. 26 million
b. 10 million
c. 14 million
d. 25 million

Why was the 2 million inventory and 1 million short term loan excluded?

[SchruteBeet]

Answer would be C. Net assets on the government-wide statement of financial position are divided into – Restricted, Unrestricted and Net Investment in Capital Assets. Inventory is not a capital asset and therefore the liability related to purchase of inventory is also excluded. Capital assets here include the roads and equipment and therefore assets minus liabilities related to these would be considered in the determination of net investments in capital assets.

AUD - 79
BEC - 80
FAR - 83
REG - 78

Ethics - 97

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[Author]

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