Easterly City has $47 million of debt recorded in its schedule of changes in long-term obligations, made up of $30 million of general obligation debt, $1 million of compensated absences payable, $4 million of claims and judgments, and $12 million of obligations under capital leases.The state limits the amount of general obligation debt that can be issued by a city to 20 percent of the assessed value of its taxable property.The assessed value of property in Easterly City is $250 million.The city's legal debt margin is

Question

Quizplus · Accepted Answer

The legal debt margin is the maximum amount of debt that a city may issue. In this case, the limit is calculated based on the limit on general obligation debt.

The limit on general obligation debt is 20% of the assessed value of taxable property.

20% of $250 million assessed value = $50 million

Therefore, the legal debt margin for Easterly City is $50 million.

Since the city already has $30 million of general obligation debt, it has $20 million remaining debt margin.

Therefore, the best choice is B.

Easterly City Has $47 Million of Debt Recorded in Its