If the Town of Orleans purchased a truck for the parks department, and the parks department's operations are financed by general revenues, where would the capital asset be recorded?

• A. General Fund
• B. Governmental Activities
• C. Enterprise Fund
• D. Fiduciary Fund

Answer: (B)

The main idea is that capital assets used by governmental programs financed by general revenues belong on the government-wide financial statements, not in the fund statements. When the park department is funded from general revenues, its truck is a governmental asset of the city as a whole, so it is recorded in the Governmental Activities section of the government-wide statements (depreciating over its useful life). The fund statements (like the General Fund) would show the purchase as an expenditure, not as a capital asset, which is why the asset isn’t recorded there. Enterprise and fiduciary funds are for different purposes (user charges and assets held for others, respectively), so they aren’t appropriate places for this capital asset.