"The Entire Debt Arising from the Acquisition of General Capital

question 20

Essay

"The entire debt arising from the acquisition of general capital assets under a capital lease agreement should be reported as debt of the fund that accounts for the activities of the department or function using the leased asset.Only debt arising from the lease of equipment used by a number of departments should be reported in the governmental activities accounts,rather than a fund." Do you agree? Why or why not?

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Definitions:

Compounded Monthly

Interest calculation method where interest is added to the principal balance every month.

Semi-annual Payments

Payments made twice a year, a common term in the context of loans, bonds, and some types of annuities.

Loan

Funds lent that must be repaid with an added interest charge.

Ordinary Annuity

A series of equal payments made at regular intervals over a specified period of time, with the first payment made at the end of the period.