A government expended $200,000 to buy land to be used by the city electric utility as a site for an office building.This land should be capitalized in the utility fund,not in the governmental activities accounts.

Question

Quizplus · Accepted Answer

GASB standards require that capital assets acquired by or used by a proprietary fund be accounted for in that fund, thus distinguishing those capital assets from general capital assets. The land would also be reported in the business-type activities accounts.

A Government Expended $200,000 to Buy Land to Be Used