When a Long-Term Note Is Given in Exchange for Equipment

question 239

Multiple Choice

When a long-term note is given in exchange for equipment, the amount considered as paid for the machine is:

• A) The invoice price.
• B) The wholesale price.
• C) The present value of cash outflows discounted at the stated rate.
• D) The present value of the note payments discounted at the market rate.

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Definitions:

Government-Wide Financial Statements

Comprehensive financial reports that present the financial position and results of operations of all governmental activities and entities.

Debt Service Fund

A fund established to account for the accumulation of resources for, and the payment of, long-term debt principal and interest.

General Fund

The primary operating fund of a government, financing a variety of its general activities and services.

Governmental Fund Financial Statements

These are financial reports that detail the financial position and results of operations of governmental funds, focusing on the sources, uses, and balances of expendable financial resources.