The City Building Authority (CBA) was created by the city and organized as a sep
ID: 2759611 • Letter: T
Question
The City Building Authority (CBA) was created by the city and organized as a separate legal entity. The CBA was created for the purpose of obtaining financing for the construction of buildings, parking lots, and recreational facilities for use solely by the city, along with acquiring the necessary sites to go with such facilities, constructing, improving, furnishing, maintaining, acquiring, and operating the public properties for the use of the city and its citizens. Financing for the projects is provided through the issuance of tax-exempt bonds by the CBA. The CBA is governed by a five-person board appointed for six-year terms by the mayor, subject to city council approval. The CBA uses the proceeds of its tax-exempt bonds to finance the construction or acquisition of general capital assets for the city only. The bonds are secured by the capital lease agreement between the CBA and the city and will be retired through lease payments from the city. How should the City present the financial activities of the CRA in its financial statements? expand
Explanation / Answer
Answer :
The bonds issued by CBA are secured by capital lease agreement : The bonds are to be shown in liabilities side under secured liabilities and ;
The capital assets are to be shown under : Fixed Assets in balance sheet
From financing by bonds , : finance arranged will be shown in Bank account under Current Assests in financial statements.