ACCT 625 Week 4 Homework
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Question 1. The following information relates to Hudson City for its ﬁscal year ended December 31, 2014.
• On January 31, 2014, the city purchased as an investment for its debt service fund a ﬁfteen-year, 6 percent,$1 million bond for $998,000. During the year it received
$30,000ininterest.Atyear-endthefairvalueofthebond was $999,500.
• On December 31, 2013, the Foundation for the Arts pledged to donate $1, up to a maximum of $1 million, for each $3 that the museum is able to collect from other private contributors. The funds are to ﬁnance construction of the city-owned art museum. During 2014, the city collected $600,000 and received the matching money from the Foundation. In January and February 2015 it collected an additional $2,400,000 and also received the matching money.
• During the year the city imposed license fees on street vendors. All vendors were required to purchase the licenses by September 30, 2014. The licenses cover the one-year period from October 1, 2014, through September 30, 2015. During 2014 the city collected $240,000 in license fees.
• The city sold a ﬁre truck for $40,000 that it had acquired ﬁve years earlier for $250,000. At the time of sale the city had charged $225,000 in depreciation.
• The city received a grant of $2 million to partially reimburse costs of training police ofﬁcers. During the year the city incurred $1,500,000 of allowable costs and received $1,200,000. It expects to incur an additional $500,000 in allowable costs in January 2015 and to be reimbursed for all allowable costs by the end of February 2015.
Refer to the two lists that follow. Select the appropriate amounts from the lettered list for each item in the numbered list. An amount may be selected once, more than once, or not at all.
1. Amount of investment income that the city should recognize in its debt service fund