Question

A governmental fund Statement of Revenues, Expenditures, and Changes in Fund Balances reported expenditures of $30 million, including capital outlay expenditures of $5 million. Capital assets for that government cost $90 million, including land of $10 million. Depreciable assets are amortized over 20 years, on average. The reconciliation from governmental changes in fund balances to governmental activities changes in net assets would reflect a(an):

Answer 1

Increase of $1 million.

Step-by-step explanation:

Depreciation expense = (Capital assets cost - Land cost) ÷ Average Years

= (90 - 10) ÷ 20

= $4 million

Reconciliation from governmental changes in fund balances to governmental activities changes in net assets would reflect:

= capital outlay expenditures - Depreciation expense

= 5 million - 4 million

= $1 million

Therefore, there is an increase of $1 million.