Multiple Choice Questions1. The City of Nomanchester has a defined benefit pension plan for a number of its employees. A pension trust fund has been set up that currently has a net position of $32.7...

Multiple Choice Questions1. The City of Nomanchester has a defined benefit pension plan for a number of its employees. A pension trust fund has been set up that currently has a net position of $32.7 million because quite a number of investments are being held. An actuary estimates that employees will eventually receive $99.7 million as a result of this pension. However, only $72.4 million of that amount is for past work that has been provided. The present value of the $72.4 million in payments is $49.8 million. On its government-wide financial statements, what amount of net pension liability should be reported? a. Zero.b. $17.1 million.c. $39.7 million.d. $67.0 million.2. The City of Huble has a defined benefit pension plan for a number of its employees. Which of the following is not included immediately in the termination of pension expense that this government should recognize in its government-wide financial statements? a. Service cost. b. Interest on total pension liability. c. Changes in pension liability as a result of a change in benefit terms. d. Changes in pension liability as a result of a change in economic or demographic assumptions.3. The City of Wilson receives a large sculpture valued at $240,000 as a gift to be placed in front of the municipal building. Which of the following is true for reporting the gift within the government-wide financial statements? a. A capital asset of $240,000 must be reported. b. No capital asset will be reported. c. If conditions are met, recording the sculpture as a capital asset is optional. d. The sculpture will be recorded but only for the amount paid by the city. 4. In problem (12), which of the following statements is true about reporting a revenue in connection with this gift? a. A revenue will be reported. b. Revenue is reported but only if the asset is reported. c. If the asset is not capitalized, no revenue should be recognized. d. As a gift, no revenue would ever be reported. 5. Assume in problem (12) that the city reports the work as a capital asset. Which of the following is true? a. Depreciation is not recorded because the city has no cost. b. Depreciation is not required if the asset is viewed as being inexhaustible. c. Depreciation must be recognized because the asset is capitalized. d. Because the property was received as a gift, recognition of depreciation is optional. 6. A city builds sidewalks throughout its various neighborhoods at a cost of $2.1 million. Which of the following is not true? a. Because the sidewalks qualify as infrastructure, the asset is viewed in the same way as land so that no depreciation is recorded. b. Depreciation is required unless the modified approach is utilized. c. The modified approach recognizes maintenance expense in lieu of depreciation expense for qualifying infrastructure assets. d. The modified approach is allowed only if the city maintains the network of sidewalks at least at a predetermined condition. 7. Which of the following is true about use of the modified approach? a. It can be applied to all capital assets of a state or local government. b. It is used to adjust depreciation expense either up or down based on conditions for the period.c. It is required for infrastructure assets. d. For qualified assets, it eliminates the recording of depreciation. 8. Which of the following is true about the management’s discussion and analysis (MD&A)? a. It is an optional addition to the comprehensive annual financial report, but the GASB encourages its inclusion. b. It adds a verbal explanation for the numbers and trends presented in the financial statements. c. It appears at the very end of a government’s comprehensive annual financial report. d. It replaces a portion of the fund financial statements traditionally presented by a state or local government. 9. Which of the following is not necessary for a special purpose local government to be viewed as a primary government for reporting purposes? a. It must have a separately elected governing body. b. It must have specifically defined geographic boundaries. c. It must be fiscally independent. d. It must have corporate powers to prove that it is legally independent. View Solution:

Multiple Choice Questions 1 The City of Nomanchester has a