ACC-410-Review and Discussion Chapter 7

ACC-410-Review and Discussion Chapter 7 - Chapter 7...

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Chapter 7 Long-Lived Assets and Investments in Marketable Securities Questions for Review and Discussion 1. General fixed assets are nonfinancial resources. They are excluded from governmental funds because the measurement focus of governmental funds is upon financial resources. Therefore, in governmental funds, the costs of fixed assets are reported as expenditures when the assets are acquired rather than first capitalized as assets and subsequently written-off as the assets are consumed. 2. At one time the GASB required governments to capitalize interest on projects that they constructed. However, GASB Statement No. 34 now specifies that interest on general long- term liabilities should be accounted for as an indirect expense, rather than being attributed to specific functions or programs, such as public works. Therefore, interest would be reported as an expenditure on the capital project fund statement of revenues and expenditures and changes in fund balance and as an expense in the government-wide statement of activities. 3. In their government-wide financial statements, governments report assets just as a business would. That is, on their statements of activities they report an annual expense for depreciation; on their statements of net assets they report their assets at historical cost less accumulated
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This note was uploaded on 01/04/2012 for the course ACC 410 ACC 410 taught by Professor Professor during the Fall '11 term at Strayer.

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ACC-410-Review and Discussion Chapter 7 - Chapter 7...

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