Question

1) The premium on bonds issued by the Capital Improvement Fund are usable by the fund.

		Usability cannot be determined from the financial statements.
		Yes, the premium was usable by the fund.
		No, the premium was not usable by the fund.
		The bonds sold by the Capital Improvement Fund were sold at par.

2)

What is a city's capitalization policy?

		Capitalize all assets over $5,000.
		The city does not have a capitalization policy.
		Capitalize all assets.
		Capitalize all assets over $1,000.

3)

Which of the following statements is true regarding the City of Dayton's Infrastructure?

		The city is NOT using the modified approach regarding the initial recording of infrastructure.
		The city IS using the modified approach regarding the initial recording of infrastructure.
		The city is NOT using the modified approach regarding the depreciation of infrastructure.
		The city IS using the modified approach regarding the depreciation of infrastructure. 4) Which account is least likely to be found in the general ledger of Dayton's Capital Improvement Fund? Expenditures Prepayments Construction Work In Progress Revenues

Answer 1

My answer is based on the Comprehensive financial reports available City of Dayton website for public use. This answer is based on the latest financials available for the Year ended 31st December 2018.

1. Premium on Bonds

Answer - No, the premium not was usable by the fund

Justification - Upon inspection of the summary of signifiant accounting policies Point O clearly states that "Bond premiums and discounts are deferred and amortized over the term of the bonds using the straight line method,which approximates the effective interest method. Bond premiums are presented as an addition to the face amount of the bonds. Bond discounts are presented as a reduction to the face amountof the bonds".

The Company has amortised and charged the premium to the Bonds face value over the life of the Bond. This accounting treatment clearly states that Bond premium are not usable by the company as it adds the premium amount to the face value of the bond.  

2. City's Capitalisation Policy

Answer - Capitalize all assets over $5,000

Justification - Upon inspection of the summary of signifiant accounting policies Point J - Capital Assets, it clearly mentions that The City maintains a capitalization threshold of $5,000. Hence, we can easily conclude that the City capitalises all assets Over $5000.

3. Answer - The city is NOT using the modified approach regarding the depreciation of infrastructure

Justification - Upon inspection of the summary of signifiant accounting policies Point J - Capital Assets, it clearly mentions that The City depreciates its assets on a Straight Line method and hence does not use the modified approach issued by the GASB.

4. Answer - All the above 4 ledger accounts are commonly found in the General Ledger of Dayton Capital improvement Fund the least likely being Prepayments.

Justification - As at 31st December 2018, the entity reported:

Construction WIP - Land of $73M, Total Expenditures of $168M, Revenues of $185M and Prepayments of 781,000.

Considering that the prepayments reported stands lower at 781,000, it is least likely found in the general ledger amongst others.