At the beginning of the year, a capital projects fund purchases $4 million in equipment for cash. The equipment has a 10-year life, straight-line. A year-end, this purchase reduces the capital projects fund's fund balance by

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In governmental accounting, when a capital projects fund purchases equipment, the entire cost of the purchase is recognized immediately, reducing the fund balance by the full purchase amount. Therefore, the $4 million purchase reduces the fund balance by $4 million.

At the Beginning of the Year, a Capital Projects Fund