Question

A government reported another financing source in the amount of $600,000 related to the sale of land in its governmental funds Statement of Revenues, Expenditures, and Changes in Fund Balances. The land had a cost of $170,000. The amount that would be reported in the government-wide Statement of Activities would be Question 5 options: a) a gain of $ 770,000. b) a gain of $ 600,000. c) a gain of $ 430,000 d) a gain of $ 170,000.

Answer 1

The amount that would be reported in the government-wide statement of Activities would be a gain of $430,000

Step-by-step explanation:

The financing source due to the sale of the land is considered as an earning and the cost of land is considered as an expenditure.

The net income can therefor be expressed as;

Net income=Gross earnings-Expenditure

where;

Gross earnings=$600,000 from sale of land

Expenditure=cost of land=$170,000

Replacing in the expression;

Net income=Gross earnings-Expenditure

Net income=$(600,000-170,000)

Net income=$430,000

The amount that would be reported in the government-wide statement of Activities would be a gain of $430,000 after accounting for all financial activities for that particular period