1-3 The dual objectives of assessing interperiod equity and ensuring budgetary compliance may necessitate different accounting practices. A city...

1-3 The dual objectives of assessing interperiod equity and ensuring budgetary compliance may necessitate different accounting practices.A city engages in the transactions that follow. For each transaction indicate the amount of revenue or expenditure that it should report in 2007. Assume first that the main objective of the financial statements is to enable users to assess budgetary compliance. Then calculate the amounts, assuming that the main objective is to assess interperiod equity. The city prepares its budget on a ‘‘modified’’ cash basis (that is, it expands the definition of cash to include short-term marketable securities), and its fiscal year ends on December 31.2. A consulting actuary calculated that per an accepted actuarial cost method, the city should contribute $225,000 to its firefighters’ pension fund for benefits earned in 2007. However, the city contributed only$170,000, the amount budgeted at the start of the year.3. The city acquired three police cars for $35,000 cash each. The vehicles are expected to last for three years.4. On December 1, 2007, the city invested $99,000 in short-term commercial paper (promissory notes). The notes matured on January 1, 2008. The city received $100,000. The $1,000 difference between the two amounts represents the city’s return (interest) on the investment.5. On January 2, 2007, the city acquired a new $10 million office building, financing it with twenty-five-year serial bonds. The bonds are to be repaid evenly over the period they are outstanding—that is, $400,000 per year. The useful life of the building is twenty-five years.6. On January 3, 2007, the city acquired another $10 million office building, financing this facility with twenty five- year term bonds. These bonds will be repaid entirely when they mature on January 1, 2032. The useful life of this building is also twenty-five years.