A government borrowed $20 million by issuing general obligation bonds to finance construction of a new airport terminal for its Airport Enterprise Fund. The bonds were issued at par, and the government intends to service the bonds from Enterprise Fund revenues. At year-end, none of the bond proceeds have been spent. The bonds payable would be included in which component of net position of an Enterprise Fund?

Question

Quizplus · Accepted Answer

The bonds are issued for a specific purpose (construction of a new airport terminal) and are intended to be serviced from Enterprise Fund revenues. Therefore, the bond proceeds are restricted for use in that particular project and would be included in the restricted net position component of the Enterprise Fund's net position.

A Government Borrowed $20 Million by Issuing General Obligation Bonds