In 2020, Sunrise City signed a contract in the amount of $8,000,000 for the construction of a new city hall. Expenditures were $4,000,000 in 2020 and $2,050,000 in 2021, which included a change to the original construction design in the amount of $50,000. What amount should be added to capital assets in the governmental activities accounts in 2021?

A. $0.

B. $50,000.

C. $2,000,000.

D. $2,050,000.

Question

Business

Carolyn May

24 April, 14:33

In 2020, Sunrise City signed a contract in the amount of $8,000,000 for the construction of a new city hall. Expenditures were $4,000,000 in 2020 and $2,050,000 in 2021, which included a change to the original construction design in the amount of $50,000. What amount should be added to capital assets in the governmental activities accounts in 2021?

A. $0.

B. $50,000.

C. $2,000,000.

D. $2,050,000.

+1

Answers (1)

Know the Answer?

Christopher Garrison · Answer 1

D. $2,050,000.

Explanation:

In 2020

Expenditure = 4,000,000

In 2021

Expenditure = 2,050,000 (Change in Design cost is already included)

All the costs incurred to make an asset usable could be capitalized. the change in original construction design is an essential cost and it is incurred before completion / use of city hall. So the cost of 2,050,000 will be added to capital account in 2021.

So the correct option is D. $2,050,000.