Which of the Following Describes How a Governmental Fund (E

question 62

Multiple Choice

Which of the following describes how a governmental fund (e.g. general fund) accounts for a capital lease?

• A) Noncurrent liability
• B) Bond accounting
• C) An asset and a lease liability
• D) None of the above identifies the appropriate way to account for a capital lease.

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Definitions:

Discount Rate

The interest rate used to discount future cash flows of a financial instrument to present value.

Present Obligation

A duty or responsibility that is expected to be settled in the future, recognized as a liability.

Past Event

An event or transaction that has occurred prior to the balance sheet date, impacting the financial position or performance of an entity.