At the inception of a capital lease agreement for a piece of equipment used in governmental operations,
A) A liability is incurred and reported in the governmental fund's balance sheet.
B) A liability is incurred and reported in the government-wide financial statements.
C) An expenditure is recorded in the governmental fund.
D) Both B and C.

Question

Quizplus · Accepted Answer

Under a capital lease, the present value of the rental and other minimum lease payments or the fair value of the leased property and the related liability are recorded in the government-wide statements and proprietary funds. Governmental funds, including the general fund, record an expenditure for the present value of the payments.

At the Inception of a Capital Lease Agreement for a Piece