NFP - Test 2 - Ch 8 Questions with Complete
Solutions
Which of the following is true of demand bonds? They give the bondholder the right to
demand repayment prior to maturity.
Demand bonds should be reported as governmental fund liabilities if If the government
has not entered into a take-out agreement.
A city issues bond anticipation notes on Oct 21, 2011. It refunds the notes with a 30 year bonds
in Jan 2012. In its financial statements for the year ending Dec 31, 2011, which are issued in
April 2012, it should report the bond anticipation notes as obligations In its government-
wide statement of net assets but not its governmental fund balance sheet.
A city issues revenue anticipation notes on oct 21, 2011. It repays the notes on Jan 2012. In its
F/S for the year ending Dec 31, 2011, which are issued in April 2012, it should report the
revenue anticipation notes as obligations in In both the government-wide statement of net
assets and a governmental fund balance sheet.
, Which of the following conditions would not automatically classify a lease as a capital lease?
The present value of rental and other minimum lease payments equals or exceeds 50% of
the FMV of the leased property.
A town signs a 10-year capital lease by which it acquires equipment with a FMV of $1M. The
lease incorporates an implicit interest rate of 8% per year. Accordingly, annual lease payments
are $149,029 When the town makes its SECOND annual lease payment, it would report in its
government-wide statements Interest expense of $74,478
State courts that have held that capital leases do not qualify as long term debt subject to debt
limitations commonly base their decision on the inclusion in the lease agreement of a
Non-appropriation clause
Revenue bonds, compared with general obligation bonds, generally Are not backed by the
full faith and credit of the issuing government
A town is located within both a school district and a county. The assessed property valuations
and bonded debts of the three governments are as follows (In Millions):
Town: $800(A) $40(B)
Solutions
Which of the following is true of demand bonds? They give the bondholder the right to
demand repayment prior to maturity.
Demand bonds should be reported as governmental fund liabilities if If the government
has not entered into a take-out agreement.
A city issues bond anticipation notes on Oct 21, 2011. It refunds the notes with a 30 year bonds
in Jan 2012. In its financial statements for the year ending Dec 31, 2011, which are issued in
April 2012, it should report the bond anticipation notes as obligations In its government-
wide statement of net assets but not its governmental fund balance sheet.
A city issues revenue anticipation notes on oct 21, 2011. It repays the notes on Jan 2012. In its
F/S for the year ending Dec 31, 2011, which are issued in April 2012, it should report the
revenue anticipation notes as obligations in In both the government-wide statement of net
assets and a governmental fund balance sheet.
, Which of the following conditions would not automatically classify a lease as a capital lease?
The present value of rental and other minimum lease payments equals or exceeds 50% of
the FMV of the leased property.
A town signs a 10-year capital lease by which it acquires equipment with a FMV of $1M. The
lease incorporates an implicit interest rate of 8% per year. Accordingly, annual lease payments
are $149,029 When the town makes its SECOND annual lease payment, it would report in its
government-wide statements Interest expense of $74,478
State courts that have held that capital leases do not qualify as long term debt subject to debt
limitations commonly base their decision on the inclusion in the lease agreement of a
Non-appropriation clause
Revenue bonds, compared with general obligation bonds, generally Are not backed by the
full faith and credit of the issuing government
A town is located within both a school district and a county. The assessed property valuations
and bonded debts of the three governments are as follows (In Millions):
Town: $800(A) $40(B)
