In a Capital Projects Fund, how are capital outlays recorded and how are assets reflected in government-wide statements?

In a Capital Projects Fund, how are capital outlays recorded and how are assets reflected in government-wide statements?

• A. Capital outlays are recorded as revenue; assets are not recognized.
• B. Capital outlays are capitalized in the Capital Projects Fund; assets depreciate in the fund.
• C. Capital outlays are recorded as transfers; assets are expensed in government-wide statements.
• D. Capital outlays are recorded as expenditures in the Capital Projects Fund; in government-wide statements, the assets are capitalized and depreciated.

Answer: (D)

In a Capital Projects Fund, capital outlays are recorded as expenditures in the fund statements. This fund uses the modified accrual basis, so you don’t capitalize or depreciate assets there. When the project assets are reported in the government-wide statements, they are capitalized as assets and depreciated over their useful lives on an accrual basis. So the fund shows expenditures for the capital outlay, while the government-wide statements reflect the asset as a capital asset and record depreciation over time.

In a Capital Projects Fund, capital outlays are recorded as expenditures in the fund statements. This fund uses the modified accrual basis, so you don’t capitalize or depreciate assets there. When the project assets are reported in the government-wide statements, they are capitalized as assets and depreciated over their useful lives on an accrual basis.

So the fund shows expenditures for the capital outlay, while the government-wide statements reflect the asset as a capital asset and record depreciation over time.