The following information is available for the preparation of the government- wide financial statements for the City of Southern Springs as of April 30, 2012: Cash and cash equivalents,
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c Look at the Statement of Net Assets, especially the net asset section
At-tempt to prove the Net Assets Invested in Capital Assets, Net of Related Debt figure from the information in the statement or the notes List the individual items of net assets that are restricted; this might require ex-amination of the notes to the financial statements
d Look at the Statement of Activities List the net expenses (revenues) for
governmental activities, business-type activities, and component units
List the change in net assets for governmental activities, business-type activities, and component units Attempt to find from the notes the com-ponent units that are discretely presented
e Look throughout the annual report for disclosures related to capital
as-sets This would include the notes to the financial statements, any ules, and information in the Management’s Discussion and Analysis (MD&A) Summarize what is included What depreciation method is used? Are lives of major classes of capital assets disclosed?
f Look throughout the annual report for disclosures related to long-term
debt This would include the notes to the financial statements, any ules in the financial and statistical sections, and the MD&A Summarize what is included Are the schedules listed in this chapter included? What
sched-is the debt limit and margin? What sched-is the direct debt per capita? The direct and overlapping debt per capita?
8–2 Identify the types of nonexchange revenues that are most likely to result in
differences in the timing of recognition between the accrual and modified accrual bases of accounting
8–3 The government-wide Statement of Net Assets separately displays
govern-mental activities and business activities Why are internal service funds most commonly displayed as governmental activities?
8–4 Answer the following questions with regard to infrastructure:
a What is infrastructure?
b What are the two methods that might be used to record infrastructure
expense from year to year? How is the accounting different under the two methods?
c What conditions must exist in order to use the modified approach to
record and report infrastructure?
d What are the disclosure requirements if the modified approach is used?
8–5 Under the reporting model required by GASB Statement 34, fund
state-ments are required for governmental, proprietary, and fiduciary funds
Government-wide statements include the Statement of Net Assets and Statement of Activities Answer the following questions related to the re-porting model:
1 What is the measurement focus and basis of accounting for: tal fund statements; proprietary fund statements; fiduciary fund state-ments; and government-wide statements?
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2 Indicate differences between fund financial statements and wide statements with regard to: component units; fiduciary funds; and location of internal service funds
3 Indicate what should be included in the Statement of Net Assets ries: Invested in Capital Assets, Net of Related Debt; Restricted; and Unrestricted
8–6 List some of the major adjustments required when converting from fund
financial statements to government-wide statements
8–7 The following information is available for the preparation of the government-
wide financial statements for the City of Southern Springs as of April
30, 2012:
Cash and cash equivalents, governmental activities $1,880,000 Cash and cash equivalents, business-type activities 850,000
Capital assets, net, governmental activities 12,500,000 Capital assets, net, business-type activities 10,340,000
General obligation bonds, governmental activities 5,000,000
Long-term liability for compensated absences,
From the preceding information, prepare (in good form) a Statement of Net Assets for the City of Southern Springs as of April 30, 2012 Assume that outstanding bonds were issued to acquire capital assets and restricted net assets total $554,000 for governmental activities and $215,000 for business-
type activities Include a Total column
8–8 The following information is available for the preparation of the government-
wide financial statements for the City of Northern Pines for the year ended June 30, 2012:
Expenses:
Interest on long-term debt, governmental type 721,000
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Revenues:
Charges for services, general government 1,110,000
Charges for services, health and sanitation 2,555,000 Operating grant, health and sanitation 1,210,000 Charges for services, culture and recreation 2,198,000 Charges for services, water and sewer 11,578,000
Special item—gain on sale of unused land,
8–9 The City of Grinders Switch maintains its books so as to prepare fund
ac-counting statements and records worksheet adjustments in order to prepare government-wide statements You are to prepare, in journal form, worksheet adjustments for each of the following situations
1 General fixed assets as of the beginning of the year, which had not been recorded, were as follows:
Buildings 32,355,000
Equipment 11,554,000 Accumulated Depreciation, Capital Assets 14,167,000
2 During the year, expenditures for capital outlays amounted to $6,113,000
Of that amount, $4,321,000 was for buildings; the remainder was for improvements other than buildings
3 The capital outlay expenditures outlined in (2) were completed at the end of the year (and will begin to be depreciated next year) For pur-poses of financial statement presentation, all capital assets are depreci-ated using the straight-line method, with no estimated salvage value
Estimated lives are as follows: buildings, 40 years; improvements other than buildings, 20 years; and equipment, 10 years
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4 In the governmental funds Statement of Revenues, Expenditures, and Changes in Fund Balances, the City reported proceeds from the sale of land in the amount of $600,000 The land originally cost $535,000
5 At the beginning of the year, general obligation bonds were outstanding
in the amount of $4,000,000 Unamortized bond premium amounted to
$40,000 Note: This entry is not covered in the text, but is similar to entry 9 in the chapter
6 During the year, debt service expenditures for the year amounted to:
interest, $580,000; principal, $400,000 For purposes of wide statements, $4,000 of the bond premium should be amortized No adjustment is necessary for interest accrual
7 At year-end, additional general obligation bonds were issued in the amount of $1,200,000, at par
8–10 The City of South Pittsburgh maintains its books so as to prepare fund
ac-counting statements and records worksheet adjustments in order to prepare government-wide statements You are to prepare, in journal form, worksheet adjustments for each of the following situations:
1 Deferred property taxes of $89,000 at the end of the previous fiscal year were recognized as property tax revenue in the current year’s Statement
of Revenues, Expenditures, and Changes in Fund Balance
2 The City levied property taxes for the current fiscal year in the amount
of $10,000,000 When making the entries, it was estimated that 2 percent
of the taxes would not be collected At year-end, $600,000 of the taxes had not been collected It was estimated that $300,000 of that amount would be collected during the 60-day period after the end of the fiscal year and that $100,000 would be collected after that time The City had recognized the maximum of property taxes allowable under modified accrual accounting
3 In addition to the expenditures recognized under modified accrual counting, the City computed that $250,000 should be accrued for com-pensated absences and charged to public safety
4 The City’s actuary estimated that the annual required contribution (ARC) under the City’s public safety employees pension plan is $229,000 for the current year The City, however, only provided $207,000 to the pen-sion plan during the current year
5 In the Statement of Revenues, Expenditures, and Changes in Fund ances, General Fund transfers out included $500,000 to a debt service fund, $600,000 to a special revenue fund, and $900,000 to an enterprise fund
Bal-8–11 The City of Southern Pines maintains its books so as to prepare fund
ac-counting statements and records worksheet adjustments in order to prepare government-wide statements As such, the City’s internal service fund, a motor pool fund, is included in the proprietary funds statements Prepare
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necessary adjustments in order to incorporate the internal service fund in the government-wide statements as a part of governmental activities
1 Balance sheet asset accounts include: Cash, $150,000; Investments,
$125,000; Due from the General Fund, $15,000; Inventories, $325,000;
and Capital Assets (net), $1,340,000 Liability accounts include: Accounts Payable, $50,000; Long-Term Advance from Enterprise Fund, $800,000
2 The only transaction in the internal service fund that is external to the government is interest revenue in the amount of $5,300
3 Exclusive of the interest revenue, the internal service fund reported net income in the amount of $36,000 An examination of the records indi-cates that services were provided as follows: one-third to general gov-ernment, one-third to public safety, and one-third to public works
8–12 Presented on the following pages are partial financial statements for the City
of Shenandoah, including:
Fiscal year 2012:
A Total Governmental Funds:
Balance Sheet Statement of Revenues, Expenditures, and Changes in Fund Balances
B Internal Service Fund:
Statement of Net Assets Statement of Revenues, Expenses, and Changes in Net Assets Fiscal year 2011:
A Total Governmental Funds:
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Liabilities
CITY OF SHENANDOAH
Statement of Revenues, Expenditures and Changes
in Fund Balances—Governmental Funds For the Year Ended December 31, 2012
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Other financing sources (uses)
Excess of revenues and other sources over
CITY OF SHENANDOAH Statement of Net Assets Proprietary Funds December 31, 2012
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in Net Assets Proprietary Funds For the Year Ended December 31, 2012
CITY OF SHENANDOAH
Statement of Net Assets Government-wide Statements December 31, 2011
(Continued )
Trang 9Accrued costs for landfill closure and postclosure care 29,500
3 The City had $6,000,000 of 6 percent general obligation bonds (issued
at par) outstanding at December 31, 2011 In addition, the City issued
$4,000,000 of 8 percent bonds on January 2, 2012 (sold at a premium)
Interest payments on both bond issues are due on January 1 and July 1
Principal payments are made on January 1 Interest and principal ments for the current year include:
pay-6 percent General 8 percent General Obligation Bonds Obligation Bonds
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The January interest payments are accrued for purposes of the government- wide statements but not the fund-basis statements The bond premium is
to be amortized in the amount of $2,500 per year
4 Property taxes expected to be collected more than 60 days after year-end are deferred in the fund basis statements
5 At the end of 2012, the accumulated liability for landfill closure and post-closure care costs is estimated to be $37,000 Landfill operations are reported in the General Fund—Public Works
6 The internal service fund serves several departments of the General Fund, all within the category of “General Government.” The internal service fund was created at the end of 2011 and had no capital assets or long-term liabilities at the end of 2011
Prepare all worksheet journal entries necessary for fiscal year 2012 to vert the governmental fund basis amounts to the economic resources mea-surement focus and accrual basis required for the governmental activities sections of the government-wide statements
con-Excel-Based Problems
8–13 The fund-basis financial statements of Jefferson County have been
com-pleted for the year 2012 and appear in the first tab of the Excel spreadsheet provided with this exercise The following information is also available:
a Capital Assets
• Capital assets purchased in previous years through governmental
type funds totaled $752,000 (net of accumulated depreciation) as of January 1, 2012
• Depreciation on capital assets used in governmental-type activities
amounted to $79,500 for 2012
• No capital assets were sold or disposed of in 2012 and all purchases are
properly reflected in the fund-basis statements as capital expenditures
b Long-term Debt
• There was no outstanding long-term debt associated with governmental-type funds as of January 1, 2012
• April 1, 2012, 6 percent bonds with a face value of $700,000 were
issued in the amount of $720,000 Bond payments are made on October 1 and April 1 of each year Interest is based on an annual rate of 6 percent and principal payments are $17,500 each The first payment (interest and principal) was made on October 1
• Amortization of the bond premium for the current year is $1,000
c Deferred Revenues
• Deferred revenues (comprised solely of property taxes) are expected
to be collected more than 60 days after year-end The balance of deferred taxes at the end of 2011 was $18,200
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d Transfers
• Transfers were between governmental-type funds
e Internal Service Fund
• The (motor pool) internal service fund’s revenue is predominantly
derived from departments classified as governmental-type activities
• There were no amounts due to the internal service fund from the
General Fund The outstanding balance of “due to other funds” was with the Enterprise Fund and is not capital related
• The enterprise fund provided a long-term advance to the internal
service fund (not capital related)
Required:
Use the Excel template provided to complete the following ments; a separate tab is provided in Excel for each of these steps
1 Prepare the journal entries necessary to convert the governmental
fund financial statements to the accrual basis of accounting
2 Post the journal entries to the conversion worksheet provided
3 Prepare a government-wide Statement of Activities and Statement of
Net Assets for the year 2012 All of the governmental fund revenues are “general revenues.”
This is an involved problem, requiring many steps Here are some hints
a Tab 1 is information to be used in the problem You do not enter
anything here
b After you make the journal entries (Tab 2), post these to the worksheet
to convert to the accrual basis This worksheet is set up so that you
enter debits as positive numbers and credits as negative After
you post your entries, look at the numbers below the total credit column to see that debits equal credits If not, you probably entered a credit as a positive number
c Make sure that total debits equal total credits in the last column
(balances for government-wide statements)
d When calculating Restricted Net Assets, recall that permanent fund
principal is added to restricted fund balances
8–14 The fund-basis financial statements of the City of Cottonwood have been
completed for the year 2012 and appear in the first tab of the Excel sheet provided with this exercise In addition, the Statement of Net Assets from the previous fiscal year is provided and should be used to determine beginning balances for accounts not appearing in the fund-basis statements
spread-The following information is also available:
a Capital Assets:
• Capital assets purchased by governmental funds are charged to capital
expenditure and do not appear as assets in the fund-basis balance
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sheet However, the balance is reflected in the statement of net assets
in the government-wide financial statements
• Depreciation on capital assets used in governmental-type activities
amounted to $2,450,000 for 2012
• No capital assets were sold or disposed of in 2012, and all purchases
are properly reflected in the fund-basis statements as capital expenditures
b Long-term debt
• Proceeds from bonds issued by governmental funds are reflected in
other financing sources and do not appear as liabilities in the fund-basis balance sheet Payments of principal are recognized as expenditures when due The balance of outstanding bonds balance is reflected in the statement of net assets in the government-wide financial statements
• Interest is recognized in the fund-basis statements only when payment
is due Interest accrued but not yet payable amounted to $107,500 at December 31, 2012 Interest accrued for purposes of the government-wide statements in 2011 has been paid and is reflected in interest expenditure in 2012
• There are no bond discounts or premiums
c Deferred Revenues
• Deferred revenues are comprised solely of property taxes expected
to be collected more than 60 days after year-end The balance of deferred taxes at the end of 2011 was $128,200 and was recognized
as revenue in the fund-basis statements in 2012
d The City accounts for its solid waste landfill in the General Fund (public
works department) The estimated liability for closure and post-closure care costs as of December 31, 2012, is $1,580,900 and appears only in the government-wide statements
e Transfers
• During the year, the General Fund transferred cash to the courthouse
renovation, debt service, and enterprise funds
f The City does not operate any Internal Service Funds
g When entering amounts in the Statement of Activities, Charges for
Ser-vices Revenue in the governmental funds is attributable to the following
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Required:
Use the Excel template provided to complete the following ments; a separate tab is provided in Excel for each of these steps
1 Prepare the journal entries necessary to convert the governmental
fund financial statements to the accrual basis of accounting
2 Post the journal entries to the conversion worksheet provided
3 Prepare a government-wide Statement of Activities and Statement of
Net Assets for the year 2012
This is an involved problem, requiring many steps Here are some hints
a Tab 1 is information to be used in the problem You do not enter
anything here
b After you make the journal entries (Tab 2), post these to the worksheet
to convert to the accrual basis This worksheet is set up so that you
enter debits as positive numbers and credits as negative After
you post your entries, look at the numbers below the total credit column to see that debits equal credits If not, you probably entered a credit as a positive number
c Make sure that total debits equal total credits in the last column
(Balances for government-wide statements)
d When calculating Restricted Net Assets, recall that permanent fund
principal is added to restricted fund balances
Continuous Problem
Available on the text’s Web site (www.mhhe.com/copley10e)
Trang 14Be thankful we’re not getting all the government we’re paying for (Will
Rogers, American humorist, 1879–1935)
The best way to find yourself is to lose yourself in the service of others
(Mahatma Gandhi, 1869–1948)
Learning Objectives
Describe characteristics of special-purpose entities and identify the required
•
financial statements of varying types of special-purpose entities
Prepare combined fund-basis/government-wide financial statements for a
•
special-purpose entity engaged in a single governmental activity
Apply the accrual basis of accounting in the recording of typical
•
transactions of a public college or university
Prepare the financial statements for a public college or university
•
This chapter describes GASB reporting standards for special-purpose entities
These standards are then applied to an important class of special-purpose
enti-ties, public colleges and universities
GASB STATEMENT 34 REPORTING RULES
FOR SPECIAL-PURPOSE ENTITIES
Chapters 2 through 8 provide accounting and financial reporting guidance for
general-purpose state and local governments General-purpose local governments
include states, counties, cities, towns, and villages Other governments are called
Chapter Nine
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special-purpose local governments and include governments such as fire
protec-tion districts, park districts, library districts, tollway authorities, and transit
authori-ties Special-purpose governments may be stand-alone local governments or may be
component units of other governments that are issuing separate reports GASB does
not give a clear definition of either general-purpose or special-purpose governments
The distinction is not always between types of governments, as one government
(say, a township) may be either a general-purpose or special-purpose government,
for purposes of financial reporting
However, the Implementation Guide for GASB Statement 34 provides a
distinc-tion by indicating that “General-purpose governments are thought to be those that
offer more than one type of basic governmental services— for example, general
government, public safety, transportation, health and welfare Special-purpose
governments generally provide a limited (or sometimes a single) set of services or
programs—for example, fire protection, library services, mosquito abatement, and
drainage.” Governmental health care entities, public school systems, other
not-for-profit entities (e.g., museums), and public colleges and universities may be
consid-ered special-purpose entities for financial reporting purposes
Chapter 2 of this text provides an introduction to financial reporting for
special-purpose local governments This chapter provides more detail and a few examples
Financial reporting for a special-purpose local government depends upon whether
that government is engaged in governmental-type activities, business-type activities
only, or fiduciary-type activities only The reporting requirements of special
pur-pose entities are summarized in Illustration 9–1
Reporting by Special-purpose Local Governments
Engaged in Governmental Activities
According to GASB Statement 34, governmental activities “generally are financed
through taxes, intergovernmental revenues, and other nonexchange revenues These
activities are usually reported in governmental funds and internal service funds.”
This would include general government, public safety, general public works, and
other activities such as public health, culture and recreation, and community
devel-opment when paid for through general governmental revenues A special-purpose
local government may be engaged in (1) both governmental activities and
business-type activities, (2) more than one governmental activity, or (3) a single
governmen-tal activity
Special-purpose governments that are engaged in both governmental and
business-type activities or in more than one governmental activity are required to follow the
reporting outlined in Chapters 2 through 8 of this text That is, the full reporting
model is required, including MD&A, government-wide and fund-basis financial
statements, notes to the financial statements, and Required Supplementary
Informa-tion (RSI)
Some special-purpose governments are engaged in only one governmental-type
activity Examples might include fire protection, sanitation, or cemetery districts
Special-purpose governments that are engaged in only one governmental-type
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ILLUSTRATION 9–1 Summary of Reporting Requirements for Special-purpose Entities
Description of purpose Entity Managements’ Discussion & Analysis Government-wide Statements Fund-Basis Statements Notes to the Financial Statements RSI Other Than MD&A Financial Statements
Special-Entities engaged in both governmental and business-type activities
✓ ✓ ✓ ✓ ✓ Statement of Net Assets (government-wide)
Statement of Activities Balance Sheet (governmental funds) Statement of Revenues, Expenditures, and Changes in Fund Balances Statement of Net Assets (proprietary funds)
Statement of Revenues, Expenses, and Changes in Fund Net Assets Statement of Cash Flows
Entities engaged in more than one governmental activity
✓ ✓ ✓ ✓ ✓ Statement of Net Assets (government-wide)
Statement of Activities Balance Sheet (governmental funds) Statement of Revenues, Expenditures, and Changes in Fund Balances Entities engaged in a
single governmental activity
✓ ✓* ✓* ✓ ✓ Governmental Funds Balance Sheet/Statement of Net Assets
Statement of Governmental Fund Revenues, Expenditures, and Changes in Fund Balances/Statement of Activities
Entities engaged in only business-type activities
✓ ✓ ✓ ✓ Statement of Net Assets (proprietary funds)
Statement of Revenues, Expenses, and Changes in Fund Net Assets Statement of Cash Flows
Entities engage in only fiduciary activities
✓ ✓ ✓ ✓ Statement of Fiduciary Net Assets
Statement of Changes in Fiduciary Net Assets
* Government-wide and fund-basis statements may be combined.