Assume that an Internal Service Fund purchases land on which to construct a new warehousing facility. The fund paid cash for 30% of the purchase price and financed the reminder with a loan from a local lending institution. The Internal Service Fund will

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The Internal Service Fund will increase its own Net Investment in Capital Assets with the purchase of the land, since this fund is responsible for managing and maintaining its own assets. The financing arrangement does not change the fact that the land is an asset of the fund, and the debt incurred will be recorded as a liability. The other choices do not apply because land is not considered a depreciable asset, and Internal Service Funds are not typically reported in the General Capital Assets accounts of the government.

Assume That an Internal Service Fund Purchases Land on Which