Simple City's General Fund expenditures included Computer for the city treasurer's office $6,000; Furniture for the mayor's office $20,000. How much should be classified as capital assets in Simple City's government-wide statement of net position at June 30?

• A. $6,000.
• B. $20,000.
• C. $26,000.
• D. $0.

Answer: (C)

In government-wide financial statements, long-lived assets acquired by any fund are capitalized and depreciated if they meet the organization's capitalization threshold, rather than being expensed in the year of purchase. Although the General Fund would record these as expenditures, the government-wide statement of net position reclassifies them as capital assets if they meet the threshold.

Both the computer and the office furniture have costs that exceed typical capitalization thresholds, so they should be recorded as capital assets. The total amount to report as capital assets is the sum of their costs: 6,000 plus 20,000 equals 26,000. Depreciation will be recognized on these assets over their useful lives in subsequent periods.