1. GASB 87 provides a new framework for accounting for leases under the principle that leases are financings. No longer will leases be classified between capital and operating. Lessees will recognize an intangible asset and a corresponding liability. The liability will be based on the payments expected to be paid over the lease term, which includes an evaluation of the likelihood of exercising renewal or termination options in the lease. The city of El Paso decided to implement early adoption in 2019. It just signs 3 years lease for an office building with a remaining Economic life of 20 years. The building has a fair market value of $555,018 million. Based on an interest rate of 4 percent, annual lease payments are set at $200,000, the amount required to liquidate a $555,018 million, 3 year, 4 percent loan in equal annual installments. Total Liability reported in Government-Wide and Governmental Fund statement respectively for City of El Paso at the end of Year 1 will be: Approximately $555,018, $555,018 respectively Approximately $177,799, 22,201 respectively Approximately $377,219, $0 respectively; Approximately $377,219, $22,201 respectively;
1. GASB 87 provides a new framework for accounting for leases under the principle that leases are financings. No longer will leases be classified between capital and operating. Lessees will recognize an intangible asset and a corresponding liability. The liability will be based on the payments expected to be paid over the lease term, which includes an evaluation of the likelihood of exercising renewal or termination options in the lease.
The city of El Paso decided to implement early adoption in 2019. It just signs 3 years lease for an office building with a remaining Economic life of 20 years. The building has a fair market value of $555,018 million. Based on an interest rate of 4 percent, annual lease payments are set at $200,000, the amount required to liquidate a $555,018 million, 3 year, 4 percent loan in equal annual installments.
Total Liability reported in Government-Wide and Governmental Fund statement respectively for City of El Paso at the end of Year 1 will be:
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Approximately $555,018, $555,018 respectively |
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Approximately $177,799, 22,201 respectively |
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Approximately $377,219, $0 respectively; |
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Approximately $377,219, $22,201 respectively;
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2.
Which of the following will increase the Pension Fund Profolio
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Employer Contribution
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Employee Contribution
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Net Investment Gain
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All of the above |
ANSWER 1 AND 2 both please
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