A5 Twatt - government and(2 the government documents that...

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Chapter 5 Tiffany Watt Assignment: A5 March 9, 2011 AC 325 – E01   Questions 5-1. General capital assets are different from capital assets recorded in proprietary or fiduciary funds in that capital assets are acquired by proprietary and fiduciary funds and are specifically associated with activities financed by those funds. On the other hand, general capital assets are long-lived assets used by activities financed by the General Fund or other governmental funds. 5-3. Under the modified approach, a government can elect not to depreciate certain eligible infrastructure assets, provided that two requirements are met: (1) The government manages the eligible infrastructure assets using an asset management system that includes an up-to-date inventory of eligible assets, condition assessments of the assets and summary of results using a measurement scale, and estimates each year of the annual amount needed to maintain and preserve the eligible assets at the condition level established and disclosed by the
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Unformatted text preview: government, and (2) the government documents that the eligible infrastructure assets are being preserved approximately at (or above) the condition level established and disclosed. Under this approach, if the government fails to maintain the assets at or above the established and disclosed condition level, it must revert to reporting depreciation for its infrastructure assets and discontinue its use of the modified approach. 5-6. It is recommended that a capital projects fund be created if money received from financing sources is restricted to the purchase or construction of specified capital assets. When deemed useful, capital projects funds may also be used to account for the acquisition of major general capital assets, such as buildings, under a capital lease agreement. Exercises & Problems 5-2. Multiple Choice. 1. A 2. D 3. C 4. A 5. B 6. C 7. D 8. C 9. A 10. C...
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