he City of Frost has a 20-year debt outstanding. On the last day of the current
ID: 2462785 • Letter: H
Question
he City of Frost has a 20-year debt outstanding. On the last day of the current year, this debt has an outstanding balance of $4.8 million and five years remaining until it is due. On that date, the debt is paid off early for $5 million. A new debt is issued (with a lower interest rate) for $5.4 million. How is the $200,000 between the amount paid and the outstanding balance of $4.8 million recognized on government-wide financial statements?
A. As an asset on the statement of net position.
B. As a reduction in liabilities.
C. As a deferred outflow of resources on the statement of net position.
D. As an expense.
he City of Frost has a 20-year debt outstanding. On the last day of the current year, this debt has an outstanding balance of $4.8 million and five years remaining until it is due. On that date, the debt is paid off early for $5 million. A new debt is issued (with a lower interest rate) for $5.4 million. How is the $200,000 between the amount paid and the outstanding balance of $4.8 million recognized on government-wide financial statements?
Explanation / Answer
C As a deferred outflow of resource on the statement of net position
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