Question

Tree City reported a $1,500 net increase in fund balance for governmental funds for the current year. During the year, Tree purchased general capital assets of $9,000 and recorded depreciation expense of $3,000. What amount should Tree report as the change in net position for governmental activities? A. $(4,500) B. $1,500 C. $7,500 D. $10,500

Answer 1

Answer

The correct answer is c. $ 7,500.

Explanation:

The reconciliation of the change in fund balance in governmental fund financial statements to the change in net position for governmental activities in the government-wide financials is computed using the GOES BARE mnemonic. The fact pattern only describes measurement focus (GOES) issues computed as follows:

G Change in Governmental Fund Balance     $ 1,500

O Other Financing Sources                                   0

E Expenditure - Capital Outlay                           9,000

(net of depreciation)                                         (3,000)

S Internal Service Fund Net Income                   0

Change in Net Position in government

-wide financial statements                               $ 7,500