Use the Following to Answer the Next Three Questions

question 119

Multiple Choice

Use the following to answer the next three questions:
A government entered into a capital lease agreement to acquire equipment for the general government on January 1, 2012. Five payments of $8,000 each are to be made, beginning on December 31, 2012. Discounting is at 6%, computed annually. The present value of the five payments is $33,699.
-Which of the following would be true as of January 1,2012?

• A) An entry would be made debiting Expenditures and crediting Other Financing Sources-Capital Leases in a governmental fund, both in the amount of $21,062.
• B) An entry would be made debiting Equipment and crediting Capital Leases Payable in a governmental fund, both in the amount of $21,062.
• C) An entry would be made debiting Equipment and crediting Capital Leases Payable in a governmental fund, both in the amount of $25,000.
• D) An entry would be made debiting Expenditures and crediting Other Financing Sources-Capital Leases in a governmental fund, both in the amount of $25,000

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Definitions:

West Coast Gateway

Refers generally to ports on the West Coast of the United States that serve as major entry and exit points for international trade and travel.

Oregon And California Trails

Historic overland routes used in the 19th century by American settlers migrating west in search of land and opportunity.

Santa Fe Trail

A historic 19th-century transportation route that connected Missouri with Santa Fe, New Mexico, facilitating trade and migration.