Problem

Use the following information for problems 10 and 11: The employees of the City o...

Use the following information for problems 10 and 11:

The employees of the City of Jones earn vacation time that totals $1,000 per week during the year. Of this amount, $12,000 is actually taken in Year 1 and the remainder is taken in Year 2.

What amount of liability should the city recognize on fund-based financial statements at December 31, Year 1? Assume that all remaining vacations will be taken in July.

a. It depends on whether the employees work at governmental activities or business-type activities.

b. $–0–.

c. $40,000.

d. $52,000.

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