A local government purchased land to be used for a new city hall to be built within the next five years. The purchase price was for the land's fair value, $1,500,000. The government financed the required $150,000 down payment by securing a short-term note with a local lending institution. The remaining $1,350,000 was financed by issuing certificates of participation. Costs incurred in issuing the certificates of participation totaled $60,000. The land should be capitalized in the General Capital Assets account in the amount of

Question

Quizplus · Accepted Answer

The land should be capitalized at its fair value, which is the purchase price of $1,500,000. Costs incurred in issuing the certificates of participation are not included in the capitalized cost of the land.

A Local Government Purchased Land to Be Used for a New