A governmental funds Statement of Revenues, Expenditures and Changes in Fund Balances reported expenditures for capital outlay in the amount of $6,000,000. Capital assets for that government cost $120,000,000, 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 assets would reflect a(an):

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The reconciliation would reflect an increase of $1,000,000 because the capital outlay expenditure of $6,000,000 is adjusted by the depreciation expense. Depreciation for the year is calculated as ($120,000,000 - $20,000,000) / 20 = $5,000,000. Therefore, the net effect is $6,000,000 - $5,000,000 = $1,000,000 increase.

A Governmental Funds Statement of Revenues, Expenditures and Changes in Fund