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The City of San Dominguez received a $800,000 federal grant to acquire several b

ID: 2509349 • Letter: T

Question

The City of San Dominguez received a $800,000 federal grant to acquire several buses to be used in its public transit system. The City paid $400,000 to acquire several buses. At year-end, $100,000 of the grant had not yet been used. During the year total depreciation on the buses was $40,000. Revenues for the public system were $500,000; operating expenses (other than depreciation) were $450,000.

Assuming the Public Transit Enterprise Fund began the year with unrestricted net assets of $420,000, prepare the following for the Public Transit Enterprise Fund.

a) Statement of Revenues, Expenses, and Changes in Fund Net Assets.

b) Net Assets section of the Statement of Net Assets.

Explanation / Answer

a. Statement of Revenues, Expenses, and Changes in Net Position Operating Revenues (A) 500,000 Less: Operating Expenses 450,000 Depreciation Expense 40,000 Total Expenses (B) 490,000 Income Before Contributions (A-B) 10,000 Add: Capital Contributions 800,000 Change in Net Assets 810,000 Add Net Assets, Beginning of Year 420,000 Net Assets, End of Year $1,230,000 b. Net Position Section of the Statement of Net Position Invested in capital assets, Net of Related Debt ($400,000 - $40,000) 360,000 Restricted Component of Net Position 400,000 Unrestricted Component of Net Position (Balance) 850,000 Total Net Assets $1,610,000