Problem 17-47 (LO 17-5) The City of Wolfe has issued its financial statements fo
ID: 2802324 • Letter: P
Question
Problem 17-47 (LO 17-5) The City of Wolfe has issued its financial statements for Year 4 (assume that the city uses a calendar year). The city's General Fund is made up of two functions: (1) education and (2) parks. The city also utilizes capital projects funds for ongoing construction and an enterprise fund to account for an art museum. It also has one discretely presented component unit The government-wide financial statements indicated the following Year 4 totals: Education had net expenses of $710,000 Parks had net expenses of $130,000 Art museum had net revenues of $80,000 General revenues were $900,000; the overall increase in net position was $140,000 The fund financial statements issued for Year 4 indicated the following The General Fund had an increase of $30,000 in its fund balance The Capital Projects Fund had an increase of $40,000 in its fund balance The Enterprise Fund had an increase of $60,000 in its net position. Officials for Wolfe define·available" as current financial resources to be paid or collected within 60 days. On the first day of the year, the City of Wolfe bought $20,000 of equipment with a 5-year life and no salvage value for its school system. It was capitalized but no other entries were ever made. The machine was monitored using the modified approach. a. Based on the information provided above, what was the correct overall change in the net position in the government-wide financial statements? The correct increase in net asset is _A i b. What was the correct amount of net expenses for education in the government-wide statements? Net expensesExplanation / Answer
a )The modified approach is applicable on Infrastructure not on machines or like so the depreciation expenses $20,000/5 = $4000 has incorrectly omitted. By including the depreciation expenses by reducing the increase in net asset from $140,000 to ($140,000 -4000) = $136,000
The correct increase in net asset is $136,000
b) The depreciation expense $4000 will increase the education expenses from $710,000 to $714,000
Net Expenses = $710,000 + $4000 = $714,000