At the inception of a lease, no entry is necessary to record capital lease agreements entered by the General Fund since neither the asset nor the lease obligation appear in the fund-basis statements.

Question

Quizplus · Accepted Answer

GASB standards require the lease to be reflected as a capital expenditure within a governmental fund. The general fund would record a to debit Expenditures - Capital Outlay for the present value of the payments and credit Cash assuming a down payment) and Other Financing Sources - Capital.

At the Inception of a Lease, No Entry Is Necessary