Use the Following to Answer the Next Five Questions

question 61

Multiple Choice

Use the following to answer the next five questions:
On October 1, 2014, the City of Mizner issued $4,000,000 in 4%, general obligation bonds at 101 for the purpose of constructing an addition to City Hall. The premium was transferred to a debt service fund. A total of $3,975,000 was used to construct the addition, which was completed prior to June 30, 2015. The remaining funds were transferred to the debt service fund. The bonds were dated October 1, 2014, and paid interest on April 1 and October 1. The first of 20 annual principal payments of $200,000 is due October 1, 2015. The fiscal year for Mizner is July 1- June 30.
-In addition to a capital asset in the government-wide Statement of Net Position,how would the construction costs of $3,975,000 be reported at year-end?

• A) As an expenditure of the capital projects fund and an expense in the government-wide Statement of Activities.
• B) As an expenditure of the capital projects fund and a capital asset in the government-wide Statement of Net Position.
• C) As an expenditure of the capital projects fund only.
• D) As a capital asset in the Statement of Net Position only.

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Definitions:

External Cost

Costs incurred by third parties as a result of an economic transaction, which are not reflected in the transaction's market price, often necessitating government intervention.

Social Cost

The total cost to society, including both private costs incurred by individuals and external costs not accounted for by the market.

Demand Curve

A graphical representation of the relationship between the price of a good or service and the quantity demanded for a given period.

Supply Curve

The supply curve is a graphical representation showing the relationship between the price of a good or service and the quantity supplied for a given period, typically upward sloping.