A. Invested in capital assets, net of related debt, would bereduced as no capita

Question

A. Invested in capital assets, net of related debt, would bereduced as no capital assets have been added to offset the newcapital related debt.

B. Restricted net assets would include the unspent cash as wellas the outstanding liability.

C. Unrestricted net assets would reflect an increase due to thecash received from the debt issuance, but invested in capitalassets, net of related debt, would decrease by the amount ofunspent debt proceeds.

D. None-net asset classifications are not affected by theissuance of long-term debt.

Explanation / Answer

The proceeds of the bond issue was meant for the country waterpurification plant .

GASB also says “ The Balance of restricted NetAssets represents restricted assets reduced by the Liabilityrelated to those assets.”

Hence , the answer is

B. Restricted Net Assets would include the unspent Cashas well as the outstanding liability.

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