What is the correct answer? In January 2010, Blue County acquired the right...
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In January 2010, Blue County acquired the right to draw water from a lake on the property of a privately owned ranch in exchange for a cash payment of $20 million. The annual volume of water that can be drawn is unlimited. The county's rights under the contract expire in 10 years; however, the contact provides the opportunity to renew the water rights for an additional 10 years for an additional payment of $10 million, if the county chooses . The county believes that it will request the renewal. The county expects the other party to agree to the renewal since the ranch is a significant user of the county's water supply and is a major employer of Blue County residents. The county operates on a calendar fiscal year. The county should recognize in its 2010 Government-Wide Financial Statements an annual amortization rate of:
$20 million in its Statement of Activities.
$2 million in its Statement of Activities.
$1.5 million in its Statement of Activities.
$30 million in its Statement of Activities.
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