Question

The City of San Dominguez received a $800,000 federal grant to acquire several buses to be used in its public transit system. The City paid $400,000 to acquire several buses. At year-end, $100,000 of the grant had not yet been used. During the year total depreciation on the buses was $40,000. Revenues for the public system were $500,000; operating expenses (other than depreciation) were $450,000.

Assuming the Public Transit Enterprise Fund began the year with unrestricted net assets of $420,000, prepare the following for the Public Transit Enterprise Fund.

a) Statement of Revenues, Expenses, and Changes in Fund Net Assets.

b) Net Assets section of the Statement of Net Assets.

Answer 1

a. Statement of Revenues, Expenses, and Changes in Net Position
Operating Revenues (A)	500,000
Less:
Operating Expenses	450,000
Depreciation Expense	40,000
Total Expenses (B)	490,000
Income Before Contributions (A-B)	10,000
Add: Capital Contributions	800,000
Change in Net Assets	810,000
Add Net Assets, Beginning of Year	420,000
Net Assets, End of Year	$1,230,000
b. Net Position Section of the Statement of Net Position
Invested in capital assets, Net of Related Debt ($400,000 - $40,000)	360,000
Restricted Component of Net Position	400,000
Unrestricted Component of Net Position (Balance)	850,000
Total Net Assets	$1,610,000