How would the construction costs be reported

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On October 1, 2019, the City of Mizner issued $6,000,000 in 4%, general obligation bonds at 101 for the purpose of constructing an addition to City Hall. The premium was transferred to a debt service fund. A total of $5,968,750 was used to construct the addition, which was completed prior to June 30, 2020. The remaining funds were transferred to the debt service fund. The bonds were dated October 1, 2019, and paid interest on April 1 and October 1. The first of 20 annual principal payments of $250,000 is due October 1, 2020. The fiscal year for Mizner is July 1- June 30.

Problem 1: How would the construction costs of $5,968,750 be reported at year-end?

A. As an expenditure of the capital projects fund and an expense in the government-wide Statement of Activities.
B. As an expenditure of the capital projects fund only.
C. As a capital asset in the Statement of Net Position only.
D. As an expenditure of the capital projects fund and a capital asset in the government-wide Statement of Net Position.

Reference no: EM132755548

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