What formula is used to prepare fund assets for the government-wide statement of net position?

The formula used to prepare fund assets for the government-wide statement of net position accurately reflects the accounting treatments necessary to assess the net value of capital assets held by the government. In this context, the first choice outlines the correct approach by taking into account the beginning balance of capital assets, adjusting for certain activities that affect the overall value of those assets over the reporting period.

Beginning Capital Assets represent the value of capital assets at the start of the period. Then, capital acquisitions increase the overall value of these assets, as new property, equipment, or infrastructure is added. Depreciation is a necessary adjustment that reflects the wear and tear on these assets over time, reducing their book value. Lastly, when capital assets are sold or disposed of, it effectively removes those assets from the government’s balance sheet, which means you need to subtract their value from the total.

When these components are combined—starting with the beginning capital assets, adding new acquisitions, then subtracting depreciation and any assets that have been sold or disposed—you arrive at the net capital assets for the government-wide statement of net position. This approach ensures that the financial statements accurately represent the government's investment in capital assets and their current valuation.