When an internal service fund (ISF)enters into a capital lease the transaction is recorded in the:
I.fixed assets of the ISF.
II.long-term debt of the ISF.
A)I only
B)II only
C)Both I and II
D)Neither I nor II

Question

Quizplus · Accepted Answer

When an internal service fund (ISF) enters into a capital lease, the transaction is recorded both as a fixed asset and as a long-term liability (debt) in the ISF's financial statements. This reflects the acquisition of the asset and the obligation to make future lease payments.

When an Internal Service Fund (ISF)enters into a Capital Lease