When a government acquires general fixed assets under a capital lease agreement,the asset should be recorded in the government-wide financial statements:

Question

Quizplus · Accepted Answer

When a government acquires general fixed assets under a capital lease agreement, the asset should be recorded in the government-wide financial statements at the inception of the lease agreement at the lesser of the present value of the minimum lease payments or the fair market value of the property. This is in accordance with the Generally Accepted Accounting Principles (GAAP) and ensures accurate reporting of capital lease assets on the financial statements. Option B and D are incorrect because recording the asset as an expenditure or an expense when payments are made does not reflect the accurate value of the asset. Option C is incorrect because it records the total lease payments, rather than the present value of the minimum lease payments, which may not accurately reflect the value of the asset.

When a Government Acquires General Fixed Assets Under a Capital