An internal service fund had the following transactions during the year ended June 30,20X9,its first year of existence:
(1)Received $1,000,000 contribution from the general fund.
(2)Acquired fleet of cars for $950,000,paying cash.
(3)Billed departments in other funds $500,000 for using cars.
(4)Incurred operating costs,exclusive of depreciation,of $240,000.
(5)Depreciation expense amounted to $250,000.
-Refer to the above information.On the internal service fund's balance sheet on June 30,20X9,total net assets should be reported at:

Question

Quizplus · Accepted Answer

Total net assets of the internal service fund should be calculated as follows:
Contributions - Assets = Liabilities + Fund Balance
$1,000,000 - $950,000 = $0 + Fund Balance
Fund Balance = $50,000
Operating costs and depreciation expenses do not affect the net assets calculation, as they are not related to the fund's financing. Therefore, the total net assets on the balance sheet should be the sum of the cash acquired and the fund balance, which is $1,010,000.

An Internal Service Fund Had the Following Transactions During the Year