Assume that the City of Wakefield purchased a tract of land to be used as a public park. The purchase was financed with proceeds from a five-year note issued by a local lending institution. Because of the time required for facilities construction and land improvements, the park itself will not be ready for public use for at least two years. At the date of purchase, the city would most likely account for the transaction in

Question

Quizplus · Accepted Answer

The purchase of land for the purpose of constructing a public park is a capital project and should be accounted for in a Capital Projects Fund. The financing for the purchase should be accounted for in the General Capital Assets and General Long-Term Liabilities accounts. The purchase does not involve any revenue-generating activities, so an Enterprise Fund would not be appropriate. The General Fund alone would not be appropriate because the transaction is a capital project and not an ongoing expense.

Assume That the City of Wakefield Purchased a Tract of Land