Questions 5 through 7 are based on the following scenario: The town of Brittainv

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Questions 5 through 7 are based on the following scenario:
The town of Brittainville has two Enterprise Funds---one for its water and wastewater operations and another for its cable television operation. The Water and Wastewater Enterprise Fund issued $11,000,000 of 6%, 15 year refunding bonds at par during the year. It also received a $175,000 federal grand to expand water and wastewater lines to economically depressed residential neighborhoods. The Cable Enterprise Fund made its annual payment of $1,000,000 to the General Fund to subsidize operations. It also was the recipient of a Federal Communication Commission unrestricted grant of $100,000.

5. How would the receipt of the grants be reported on the statement of cash flows for the Water and Wastewater Enterprise Fund and the Cable Enterprise Fund, respectively?
a. Cash flows from capital and related financing activities for the Water and Wastewater Enterprise Fund and cash flows from noncapital financing activities for the Cable Enterprise Fund.
b. Assuming the Cable Enterprise Fund chose to use the proceeds of its great for capital needs, both fund would reflect the grant receipt in cash flows from capital needs, both funds would reflect the grant receipt in cash flows from capital and related financing activities.
c. Cash flows from capital and related financing activities for the Water and Wastewater Enterprise Fund and cash flows from operating activities for the Cable Enterprise Fund.
d. Both funds would report the grant receipt as cash flows from operating activities

6. How will the interfund payment be reported on the Cable Enterprise Fund’s operating statement?
a. Transfer out of $1,000,000
b. Operating expense of $1,000,000
c. Nonoperating expense of $1,000,000
d. Capital contribution of $1,000,000
e. None of the above—the transaction is not reported on the operating statement, but as a direct reduction of equity on the statement of net assets

7. How would the changes in net assets amount be impacted in the Water and Wastewater Enterprise Fund by the transactions summarized above?
a. Changes in net assets would not be affected by the debt issuance; the grant would increase changes in net assets.
b. Changes in net assets would be decreased by any costs associated with issuing the refunding bonds; the grant would increase changes in net assets.
c. Both the refunding transaction and the grant would increase changes in net assets.
d. Both the refunding transaction and the grant would decrease changes in net assets.
e. Changes in net assets would not be affected by either transaction.

Questions 8 through 10 are based on the following facts about an Enterprise Fund for a utility operation:
Outstanding bonds issued for capital improvements……………
Transfer to General Fund (occurs annually)………………………….
Charges for services earned in the current year……………………
Unspent capital bond issue proceeds…………………………………..
Salaries and wages expense for the current year………………….
Interest earnings on all investments…………………………………….
Fair market value of water lines donated by a local developer.
Net book value of all other existing capital assets………………….

8. Invested in capital assets, net of related debt, would be
a. $7,310,500
b. $8,310,500
c. ($2,189,500)
d. $4,310,500
e. $1,810,500

9. Cash flows for noncapital financing activities would decrease
a. $0
b. $10,100,000
c. $9,500,000
d. $500,000
e. None of the above

10. The operating statement of the Enterprise Fund would not be directly impacted by
a. the amount of unspent bond proceeds at the end of the year
b. the donation by the local developer
c. the transfer to the General Fund
d. All of the above
e. Items a and b only

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