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During the year an enterprise fund purchased $230,000 worth of equipment. The equipment was acquired with a cash down payment of $30,000 and a $200,000 loan. A partial year of depreciation on the equipment was taken in the amount of $23,000. What is the net effect of this transaction on the net position accounts of the enterprise fund?

a. Net investment in capital assets is increased by $7,000.
b. Net investment in capital assets is increased by $30,000.
c. Net investment in capital assets is increased by $207,000.
d. Net investment in capital assets is increased by $230,000.

Respuesta :

Answer:

Option (a) is correct.

Explanation:

Net value of the equipment:

= Cost of equipment - Partial year depreciation

= $230,000 - $23,000

= $207,000

Increase in capital assets:

= Net value of the equipment - Acquired loan

=  $207,000 - $200,000

= $7,000

Therefore, the net effect of this transaction on the net position accounts of the enterprise fund is an increase in the net investment in capital assets by $7,000.

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