When a City Enters into a Capital Lease for a Fixed

question 42

Multiple Choice

When a city enters into a capital lease for a fixed asset for the general government,

• A)government-wide statements will report the asset and liability for the leased asset.
• B)government-wide statements will not report the liability,Capital Lease Obligation.
• C)governmental fund statements will report a fixed asset.
• D)governmental fund statements will report a liability,Capital Lease Obligation.

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Definitions:

Creditor

An individual or institution that lends money or extends credit to another entity.

Settle

Completing a financial transaction by exchanging the payment of instruments between parties involved.

Discounting

The process of determining the present value of a payment or a stream of payments that is to be received in the future.

Opposite

In the context of numbers, it refers to the additive inverse of a number, which when added to the original number, results in zero.