A Government Enters into a Capital Lease for the Purchase

question 7

Multiple Choice

A government enters into a capital lease for the purchase of a new snow plow.The present value of the future lease payments is $845,500 and there is a down payment at the inception of the lease of $25,000.The snow plow should be recorded in the government-wide statement of net position at:

• A) $ 25,000.
• B) $870,500.
• C) $845,500.
• D) $0.

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Definitions:

U.S. President

The U.S. President is the head of state and head of government of the United States, and is responsible for the executive branch of the federal government.

Real Wages

Wages adjusted for inflation, representing the purchasing power of income earned from labor.

Labor Markets

The supply and demand for labor, where employers seek to hire workers and workers seek employment.

Contract

A legally binding agreement between parties that outlines the terms and conditions under which a transaction or exchange is to take place.