Answer: See explanation
Explanation:
a. Prepare the entries assuming infrastructure assets are capitalized with depreciation recorded on government-wide financial statements.
1. Debit: Infrastructure assets—street lights $300,000
Credit: Cash $300,000
(To record cash purchase of street light
2. Debit: Depreciation expense $300,000/10 = $30,000
Credit: Accumulated depreciation—infrastructure assets $30,000
(To record depreciation expense)
3. Debit: Maintenance expense—infrastructure assets $48000
Credit: Cash $48000
(To record maintenance expense)
4. Debit: Infrastructure assets—street lights $78000
Credit: Cash $78000
(To record cash expense for new light)
b. Prepare the entries assuming infrastructure assets are capitalized with government using the modified approach on government-wide financial statements.
1. Debit: Infrastructure assets—street lights $300,000
Credit: Cash $300,000
(To record purchase of street light)
2. Debit: Maintenance expense—infrastructure assets $48000
Credit: Cash $48000
(To record maintenance expense)
3. Debit: Infrastructure assets—street lights $78000
Credit: Cash $78000
(To record cash expense for new light)
