On January 1, 20x7, Clyde County issued $100 million of 5%,20-year bonds at 102. Interest is payable semiannually. Theproceeds were restricted for the construction of a new county waterpurification plant for its Water Enterprise Fund.
Assume that as of the end of the fiscal year the capitalproject had not yet begun, thus the debt proceeds were stillunspent. What classifications of net assets would be affected by this fact?
A. Invested in capital assets, net of related debt, would bereduced as no capital assets have been added to offset the newcapital related debt.
B. Restricted net assets would include the unspent cash as wellas the outstanding liability.
C. Unrestricted net assets would reflect an increase due to the cash received from the debt issuance, but invested in capitalassets, net of related debt, would decrease by the amount ofunspent debt proceeds.
D. None-net asset classifications are not affected by theissuance of long-term debt.