Question

The following items were included in Castle City's General Fund expenditures for the year ended June. Personal computer for the city treasurer $ 6,000 Furniture for the mayor’s office $ 20,000 How much should be classified as capital assets in Castle City's General Fund balance sheet at June 30?

Answer 1

Answer:

$0

Explanation:

Capital assets are useful items that a business intends to keep beyond the current financial year. They are assets held for personal or investment purposes. Capital assets exclude items meant for sale in the current financial period.

Capital assets are used in the business operations to generate more revenues for the company. They are assets with a  use-life that is greater than one year. Castle City General purchased a computer to be used by the city's treasurer. Castle City General will not use this item; hence it will not help in generating any revenues. The Furniture is for the mayor's office, and not the Castle City operations. These two purchases will not be included in Castle City books as capital expenditures.