Answer:
a.Dr Infrastructure Assets - Street Lights $300,000
Cr Cash $300,000
Dr Depreciation Expense $30,000
Cr Accumulated Depreciation - Infrastructure Assets $30,000
Dr Maintenance Expense - Infrastructure Assets $48,000
Cr Cash $48,000
Dr Infrastructure Assets - Street Lights $78,000
Cr Cash$78,000
b.
Dr Infrastructure Assets - Street Lights $300,000
Cr Cash $300,000
Dr Maintenance Expense - Infrastructure Assets $48,000
Cash $48,000
Dr Infrastructure Assets - Street Lights $78,000
Cr Cash $78,000
Explanation:
1.Preparation of the Journal entries assuming infrastructure assets are capitalized with depreciation recorded.
Based on the information given we were told that the city government adds street lights total cost of the amount of $300,000 which means that the transaction will be recorded as:
Dr Infrastructure Assets - Street Lights $300,000
Cr Cash $300,000
(To record the original cost of the asset)
Based on the information given we were told that the city government adds street lights total cost of the amount of $300,000 in which the lights should burn for at least 10 years
which means that the transaction will be recorded as:
Dr Depreciation Expense $30,000
($300,000/10)
Cr Accumulated Depreciation - Infrastructure Assets $30,000
(To record the amount of depreciation expense)
Based on the information given we were told that city spends the amount of $48,000 in order to clean and repair the lights, this means that the Journal entry will be:
Maintenance Expense - Infrastructure Assets $48,000
Cr Cash $48,000
(To record maintenance expenses)
Based on the information given we were told that they spends another amount of $78,000 to construct lights for new streets in the city which means that the Journal entry will be :
Dr Infrastructure Assets - Street Lights $78,000
Cr Cash $78,000
(To record the additional cost of assets)
b.Preparation of t the Journal entries assuming infrastructure assets capitalized with government using the modified approach.
Based on the information given we were told that the city government adds street lights total cost of the amount of $300,000 which means that the transaction will be recorded as:
Dr Infrastructure Assets - Street Lights $300,000
Cr Cash $300,000
(To record the original cost of the assets)
Based on the information given we were told that city spends the amount of $48,000 in order to clean and repair the lights, this means that the Journal entry will be:
Dr Maintenance Expense - Infrastructure Assets $48,000
Cash $48,000
(To record t maintenance expense)
Based on the information given we were told that they spends another amount of $78,000 to construct lights for new streets in the city which means that the Journal entry will be :
Dr Infrastructure Assets - Street Lights $78,000
Cr Cash $78,000
(To record the additional cost of assets)
