Use the Following to Answer the Next Four Questions

question 72

Multiple Choice

Use the following to answer the next four questions:
On April 1, 2015, the City of Southern Ponds issued $3,500,000 in 4% general obligation, tax supported bonds at 101 for the purpose of constructing a new police station. The premium was transferred to a debt service fund. A total of $3,490,000 was used to construct the police station, which was completed before December 31, 2015, the end of the fiscal year. The remaining funds were transferred to the debt service fund. The bonds were dated April 1, 2015, and paid interest on October 1 and April 1. The first of 20 equal annual principal payments of $175,000 is due April 1, 2016.
-How would the $3,490,000 be accounted for?

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