Question

A government's assets include inventory of $2 million, roads constructed for $25 million with accumulated depreciation of $10 million, and equipment acquired for $5 million with accumulated depreciation of $1 million. Its liabilities include an outstanding balance of $5 million for bonds payable issued to construct the roads and a $1 million short-term loan for inventory purchases. What amount should be reported as the net investment in capital assets in the government-wide statement of net position?

$10 million
$26 million
$14 million
$25 million

Answer 1

Answer: $14 million is the amount that should be reported as the net investment in capital assets in the government-wide statement of net position.

Inventory is not a capital asset also the liability in regards to acquisition of inventory is left out. In this case capital assets are in regards with the roads and equipment.