Question

A government incurred expenditures for its infrastructure as follows: $20 million for general repairs; $22 million to extend the life of existing infrastructure; $21 million for improvements and additions. If depreciation is to be charged, the amount would be $23 million. Which of the following would be true?

A) If the government chose to use the modified approach to record infrastructure, the amount to be charged as expense would be $42 million.
B) If the government chose not to use the modified approach to record infrastructure, the amount to be charged to expense would be $43 million.
C) Both A and B.
D) None of the above.

Answer 1

The correct answer is C_ both A and B

Step-by-step explanation:

Modified accrual approach: 20 repairs + 22 extend life = $42 million

Depreciation: 20 repairs + 23 depr. = $43 million

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