A government has general obligation serial bonds outstanding at December 31, 2006, and December 31, 2007. Interest is paid at the end of April and October. The governmental funds Statement of Revenues, Expenditures, and Changes in Fund Balances reports interest expenditures of $500,000 for 2007. Interest payable but not yet due was $80,000 at December 31, 2006, and $75,000 at December 31, 2007. What is the amount of interest expense to be reported in the government-wide Statement of Activities for the year ended December 31, 2007 (assume there is no premium or discount)?
The solution determines the amount of interest expense to be reported in the government-wide Statement of Activities.