Apago PDF Enhancer Government-wide Statements, Fixed Assets, Long-Term Debt 221 focus and basis of accounting used for each fund’s statements (current financial resources focus and modified accrual basis for governmental funds and economic resources focus and accrual basis for all others). At the end of the reporting period, governments adjust governmental fund records to the economic resources focus and accrual basis required in the government-wide statements. This is accomplished through worksheet entries. Worksheet entries differ from other journal entries, in that they are not posted to the general ledger—in effect, they are never “booked.” 1 Illustration 8–1 summarizes this process. The government-wide statements are separated into governmental activities and business-type activities (discretely pre- sented component units are also separately displayed). The governmental-type funds’ Balance Sheet and Statement of Revenues, Expenditures, and Changes in Fund Balances serve as inputs to the governmental activities sections of the government-wide statements. However, because the fund-basis statements reflect modified accrual accounting, they must be adjusted to the accrual basis. In con- trast, balances from the enterprise funds’ Statement of Net Assets and Statement of Revenues, Expenses, and Changes in Fund Net Assets are entered directly to the business-type activities sections of the government-wide statements. No ad- justment is necessary because enterprise funds use the accrual basis. As Illustration 8–1 suggests, internal service funds are typically reported in the governmental activities sections of the government-wide statements, while fiduciary activities are not included in the government-wide statements at all. Finally, prepa- ration of the government-wide statements requires information on the balances and changes in general fixed assets and general long-term debt. As the illustration shows, these amounts are not included in the fund-basis statements but must be recorded in the government’s accounting records if they are to be available at the time the government-wide statements are prepared. Entries to record events affecting general fixed assets and general long-term debt are illustrated later in the chapter. Like earlier chapters, the Village of Elizabeth example is extended in this chapter to illustrate the preparation of government-wide statements and certain required schedules. CONVERSION FROM FUND FINANCIAL RECORDS TO GOVERNMENT-WIDE FINANCIAL STATEMENTS The conversion worksheet is illustrated within the shaded area of Illustration 8–1. The fund-basis financial statements for the governmental funds are entered directly into the left-hand column of the worksheet. General fixed assets, general long-term debt, and internal service funds are added through worksheet journal entries. In addition, worksheet entries eliminate elements of the modified accrual basis fund statements that do not conform to accrual accounting, such as expenditures for capi- tal assets and principal repayments. Expenditures that are not eliminated become 1 Worksheet entries are commonly used by corporations in the process of consolidating subsidiary companies. cop2705X_Ch08_220-266.indd 221cop2705X_Ch08_220-266.indd 221 2/1/10 5:53:25 PM2/1/10 5:53:25 PM Apago PDF Enhancer 222 Chapter 8 expenses in the right-hand column. Additional entries are necessary to adjust reve- nues to the accrual basis, record expenses not recognized under the modified accrual basis, and eliminate interfund transfers and balances. The resulting balances appear- ing in the far right column are entered into the governmental activities sections of the government-wide statements. No entries are necessary to eliminate fiduciary funds; they are simply left out of the worksheet and therefore never appear in the government-wide statements. ILLUSTRATION 8–1 Information Flow to the Government-Wide Statements Government-wide Statement of Net Assets Fund-basis Financial Statements: Governmental Funds Fund-basis Financial Statements: Proprietary Funds Fund-basis Financial Statements: Fiduciary Funds Accounting Ledgers: Governmental Funds Records of General Fixed Assets and Long-term Debt Accounting Ledgers: Proprietary Funds Accounting Ledgers: Fiduciary Funds Enterprise Funds Fiduciary funds are not included. Government-wide Statement of Activities Conversion Worksheet Dr Cr Accrual Basis Fund-basis Statements: Governmental Funds Modified Accrual Basis Balances Adjusted for Government-wide Statements Worksheet Entries Internal Service Funds cop2705X_Ch08_220-266.indd 222cop2705X_Ch08_220-266.indd 222 2/1/10 5:53:25 PM2/1/10 5:53:25 PM Apago PDF Enhancer Government-wide Statements, Fixed Assets, Long-Term Debt 223 A process similar to Illustration 8–1 is followed in the event a government has a discretely presented component unit. Component units are displayed as a separate column in the Statement of Net Assets (see Illustration 2–5) and as separate rows in the Statement of Activities (see Illustration 2–6). Many component units use the accrual basis of accounting and the balances of assets, liabilities, and net assets may be entered directly into the component unit column in the Statement of Net Assets. Similarly, the revenues and expenses are entered directly into the component unit rows of the Statement of Activities. Other component units use the modified accrual basis in their accounting records and must be converted to the accrual basis for presentation in the government-wide statements. If this is the case, the component unit’s information flow is similar to that of governmental funds. Worksheet entries are needed to convert the component unit to the accrual basis and economic re- sources measurement focus. Component units that are fiduciary in nature are not included in the government-wide statements. The next section of the text discusses and presents, for the Village of Elizabeth, example adjustments necessary to convert from fund financial statements to government-wide statements. These examples are not exhaustive but contain the major changes and include: Capital Asset–Related Entries: Recording capital assets, removing expenditures 1. for capital outlays, recording depreciation, and converting sales of capital assets to the accrual basis. Long-term Debt–Related Entries: Changing “proceeds of bonds” to debt liabili-2. ties, changing expenditures for debt service principal to reduction of liabilities, amortizing bond premiums, and adjusting for interest accruals. Adjusting to convert revenue recognition to the accrual basis. 3. Adjusting expenses to the accrual basis. 4. Adding internal service funds to governmental activities. 5. Eliminating interfund activities and balances within governmental activities. 6. Each of these is discussed and illustrated in turn, using the information in the governmental funds Balance Sheet (Illustration 5–3) and Statement of Revenues, Expenditures, and Changes in Fund Balances (Illustration 5–4) as the starting point. CAPITAL ASSET–RELATED ENTRIES GASB requires that general fixed assets be included in the government-wide finan- cial statements. General fixed assets include fixed assets other than those used by proprietary or fiduciary funds and are usually acquired through General, special revenue, or capital projects funds. Fixed assets acquired through proprietary and fiduciary funds are reported in the Statement of Net Assets of those funds. Assume that the Village of Elizabeth maintains fixed asset records for general fixed assets, including the original cost and accumulated depreciation. Categories include land, buildings, improvements other than buildings (infrastructure), and equipment. The cop2705X_Ch08_220-266.indd 223cop2705X_Ch08_220-266.indd 223 2/1/10 5:53:25 PM2/1/10 5:53:25 PM Apago PDF Enhancer 224 Chapter 8 first worksheet entry is needed to record the capital assets and related accumulated depreciation as of the beginning of the year: Debits Credits 1. Land . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,100,000 Buildings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38,300,000 Improvements Other Than Buildings . . . . . . . . . . . . . . . . . . . . . 15,400,000 Equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,600,000 Accumulated Depreciation—Buildings . . . . . . . . . . . . . . . . . 15,100,000 Accumulated Depreciation—Improvements Other Than Buildings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,300,000 Accumulated Depreciation—Equipment . . . . . . . . . . . . . . . . 3,700,000 Net Assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37,300,000 The amount of detail necessary in this journal entry depends on whether a government intends to report individual capital asset balances (e.g., land, build- ings, etc.). Assuming the Village of Elizabeth only reports capital assets in total, the journal entry could be condensed to a debit to Capital Assets of $62,400,000, a credit to Accumulated Depreciation of $25,100,000, and a credit to Net Assets of $37,300,000. Because worksheet entries are not posted to the fund general ledger, an entry to record beginning balances will be required each year. Note that the account, Net Assets, is credited for the difference. The difference between assets and liabilities in the government-wide statements is called net assets. A second adjustment is required to eliminate the charge to expenditures for capital outlay and to record those expenditures as capital assets, as is required for accrual accounting. In practice, this would require a review of all governmental fund expenditures, to determine which should be capitalized. In the Village of Elizabeth example, it is assumed that the only capital assets acquired this year were reflected in the capital projects fund example in Chapter 5. Note that the amount of expendi- tures, including interest, closed out in entry 17 of the capital projects fund example in Chapter 5, is $1,963,500. GASB Statement 37 specifically prohibits interest during construction in governmental funds from being capitalized in the government-wide statements. As a result, the $2,500 in interest is charged to interest expense, and the $1,961,000 is capitalized. The following adjustment is required. 2. Buildings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,961,000 Interest Expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,500 Expenditures—Capital Outlay . . . . . . . . . . . . . . . . . . . . . . . . 1,963,500 Remember that these entries are only worksheet entries used to prepare the government-wide statements and would not be posted to the general ledgers of the governmental funds. cop2705X_Ch08_220-266.indd 224cop2705X_Ch08_220-266.indd 224 2/1/10 5:53:25 PM2/1/10 5:53:25 PM Apago PDF Enhancer Government-wide Statements, Fixed Assets, Long-Term Debt 225 A third adjustment is necessary to record depreciation expense. Assume that the Village of Elizabeth uses straight-line depreciation with no salvage value and that buildings have a 40-year life, improvements other than buildings have a 20-year life, and equipment has a 10-year life. Also assume the building capitalized this year was acquired late in the year, and that no depreciation is charged. The adjust- ment would be: Debits Credits 3. Depreciation Expense. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,287,500 Accumulated Depreciation—Buildings ($38,300,000/40). . . 957,500 Accumulated Depreciation—Improvements Other Than Buildings ($15,400,000/20) . . . . . . . . . . . . . . 770,000 Accumulated Depreciation—Equipment ($5,600,000/10). . . 560,000 Additional information regarding fixed asset accounting and reporting is discussed in the appendix of this chapter. If a government sold or disposed of fixed assets during the year, an additional entry is required. Entry 28 in the General Fund example in Chapter 4 reflects proceeds in the amount of $300,000 on the sale of land. That amount was prop- erly reported as an other financing source in the Governmental Fund Statement of Revenues, Expenditures, and Changes in Fund Balances (Illustration 5–4). Assume now that the cost of that land was $225,000, which is included in the land amount reported in entry 1 above. It is necessary to convert this to an accrual basis so that the gain on the sale is reflected in the Statement of Activities and land removed from the Statement of Net Assets. 4. Special Item—Proceeds from the Sale of Land . . . . . . . . . . . . . 300,000 Land . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 225,000 Special Item—Gain on Sale of Land . . . . . . . . . . . . . . . . . . . 75,000 Panel A of Illustration 8–2 demonstrates how the worksheet entries act with the existing modified accrual outcomes to produce accrual basis results. The first column of the illustration displays the journal entry that took place during the year under the modified accrual basis of accounting and the second column displays the related worksheet entry. The final (shaded) column is the net effect of the previous two entries and is the entry that would have been made had the government recorded the events using the accrual basis. Note that the entry appearing in the “accrual basis” column is never made, either during the year or at year-end. It is simply the outcome of the previous two entries. This illustration summarizes for capital asset transactions the process we will use throughout this chapter. We begin the process with the results for the year computed using the modified accrual basis, then apply worksheet entries, and end the process with results “as if” we had kept the records on the accrual basis. cop2705X_Ch08_220-266.indd 225cop2705X_Ch08_220-266.indd 225 2/1/10 5:53:25 PM2/1/10 5:53:25 PM Apago PDF Enhancer ILLUSTRATION 8–2 Panel A: How Worksheet Entries Produce Accrual Basis Outcomes: Capital Assets Entry Under Modified Accrual (entry made sometime during the year) Expenditures Ϫ Capital Outlay Expenditures Ϫ Capital Outlay Capital Assets Ϫ Buildings Cash account eliminated Capital Assets Ϫ Buildings Cash Dr Cr – – Dr Cr Dr Cr Worksheet Entry for Preparation of Government-wide Statements Net Effect after Worksheet Entry (Same as Accrual Basis) 1. Capital Asset Acquisitions Cash Capital asset Ϫ equipment (net) Gain on sale of capital asset Proceeds sale of capital assetProceeds sale of capital asset account eliminated Cash Capital asset Ϫ equipment (net) Gain on sale of capital asset Dr Cr Cr 3. Sale of Capital Assets Accumulated Depreciation Depreciation Expense Accumulated Depreciation Depreciation Expense No entry Dr Cr 2. Annual Depreciation Cr Dr Dr Dr Cr Cr Cr 226 cop2705X_Ch08_220-266.indd 226cop2705X_Ch08_220-266.indd 226 2/1/10 5:53:25 PM2/1/10 5:53:25 PM Apago PDF Enhancer ILLUSTRATION 8–2 Panel B: How Worksheet Entries Produce Accrual Basis Outcomes: Long-term Debt Entry Under Modified Accrual (entry made sometime during the year) OFS: Proceeds of bonds OFS: Premium on bonds OFS: Proceeds of bonds OFS: Premium on bonds Dr Dr Premium on Bonds Bonds Payable Premium on Bonds Bonds Payable Bonds Payable Cash account eliminated account eliminated account eliminated Cash Dr Cr – – – Cr Dr Cr Cr Cr Cr Worksheet Entry for Preparation of Government-wide Statements Net Effect after Worksheet Entry (Same as Accrual Basis) 1. Sale of Bonds Cash Expenditure: Bond Principal Expenditure: Bond Principal Bonds Payable Cash 3. Principal Payment Interest Expense Premium on Bonds Interest Expense Premium on Bonds No entry Dr Cr Dr Cr 2. Amortization of Bond Premium Dr Cr Dr Cr Cr Dr 227 cop2705X_Ch08_220-266.indd 227cop2705X_Ch08_220-266.indd 227 2/1/10 5:53:25 PM2/1/10 5:53:25 PM Apago PDF Enhancer 228 Chapter 8 LONG-TERM DEBT–RELATED ENTRIES In this section we examine typical worksheet entries related to long-term debt. Under accrual accounting, debt principal is recorded as a liability, interest expense is accrued at year-end, and premiums and discounts are amortized over the life of bonds. In the Village of Elizabeth example, 10-year serial bonds, with a principal amount of $1,200,000 were sold on January 2, for $1,212,000. Annual interest of 8 percent was paid semiannually on June 30 and December 31, and the first princi- pal payment of $120,000 was paid on December 31. The $1,212,000 was recorded as another financing source in the capital projects fund (entries 8a and 8b in Chap- ter 5). To convert to accrual accounting, the following entry would be required: Debits Credits 5. Other Financing Sources—Proceeds of Bonds . . . . . . . . . . . . . 1,200,000 Other Financing Sources—Premium on Bonds . . . . . . . . . . . . . 12,000 Bonds Payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,200,000 Premium on Bonds Payable . . . . . . . . . . . . . . . . . . . . . . . . . . 12,000 The account, Premium on Bonds Payable, is an addition to the liability, as would be the case in business accounting. In subsequent years the debit in this entry (equal to the beginning balance of the bonds) will be to Net Assets. To adjust the principal pay- ment (entry 22b, debt service funds, Chapter 5), the following would be required: 6. Bonds Payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 120,000 Expenditures—Bond Principal. . . . . . . . . . . . . . . . . . . . . . . . 120,000 Normally, an adjustment would be required to accrue interest at year-end. In the Village of Elizabeth example, the last interest payment is the final day of the fiscal year, so an accrual is not necessary. If there had been an interval of time between the last interest payment and the end of the fiscal year, the entry to accrue the interest would take the following form: 2012 Interest Expense (2012). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ XXX Accrued Interest Payable. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ XXX It is important to recognize that accruals such as interest require entries in two years. The interest accrued above for the 2012 fiscal year would have been paid and recorded as an expenditure in 2013 under modified accrual accounting. Therefore, in 2013 we have too much interest and an additional worksheet entry would be re- quired to move the accrued interest expense out of 2013, as follows: cop2705X_Ch08_220-266.indd 228cop2705X_Ch08_220-266.indd 228 2/1/10 5:53:25 PM2/1/10 5:53:25 PM Apago PDF Enhancer Government-wide Statements, Fixed Assets, Long-Term Debt 229 Debits Credits 2013 Net Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ XXX Interest Expense (2013). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ XXX Why is the debit in 2013 to Net Assets rather than to Accrued Interest Payable? Recall that the 2012 entry was a worksheet entry—never booked to the General Ledger. Therefore, there is no Accrued Interest Payable to remove in 2013. How- ever, the net assets (at the government-wide level) at the beginning of 2013 would have been smaller as a result of the 2012 accrual and the debit in 2013 reflects that effect. Although interest accruals are not required in the Village of Elizabeth example, the bond premium must be amortized. Assume, for simplicity, that the straight-line method of amortization is considered not materially different from the effective interest method. As a result, the amortization would be $1,200. An adjusting entry to provide for the amortization would be as follows: 7. Premium on Bonds Payable ($12,000/10) . . . . . . . . . . . . . . . . . 1,200 Interest Expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,200 The adjusted balance of interest ($96,000 ϩ $2,500 Ϫ $1,200) will be reported as “interest expense” in the government-wide statement of activity. Panel B of Illustration 8–2 demonstrates how the worksheet entries act with the existing modified accrual outcomes to produce accrual basis results for long-term debt. Again, the first column of the illustration displays the journal entry that took place during the year under the modified accrual basis of accounting and the second column displays the related worksheet entry. The final (shaded) column is the net effect of the previous two entries and is the entry that would have been made had the government recorded transactions affecting long-term debt on the accrual basis. Accounts that exist only under the modified accrual basis, such as Other Financing Sources , are eliminated and long-term liability balances are recorded and adjusted. Again, no entries would be required for debt issued by proprietary funds because those funds already report on the accrual basis. Adjusting to Convert Revenue Recognition to the Accrual Basis Chapter 3 introduced the concept of revenue recognition under modified accrual accounting. We observed that revenues are recognized when available and measurable. Revenues are deemed to be available if they are collectible within the current fiscal year or soon enough after the year-end that they could be used to settle current period liabilities. A special rule applied to property taxes—the sixty day rule. Under modified accrual, property taxes expected to be collected more than 60 days following year-end are deferred and recognized as revenue in the following year. cop2705X_Ch08_220-266.indd 229cop2705X_Ch08_220-266.indd 229 2/1/10 5:53:25 PM2/1/10 5:53:25 PM Apago PDF Enhancer 230 Chapter 8 Chapter 3 also introduced the four classes of nonexchange transactions and described how they are reported in the modified accrual basis financial state- ments (Illustration 3–5). The government-wide statements are prepared using accrual accounting. GASB Statement 33, Accounting and Financial Report- ing for Nonexchange Transactions , describes how nonexchange transactions should be reported in the government-wide financial statements under the accrual basis. Whenever revenue is recognized in a different time period under the modified accrual basis than under the accrual basis, worksheet entries will be required. Illustration 8–3 presents the four classes of nonexchange transactions. Panel A describes and contrasts revenue recognition under the modified accrual and accrual bases. Panel B illustrates the journal entries to record the revenue under the modi- fied accrual basis in the governmental fund basis financial statements. The final column of panel B illustrates the journal entry to convert the governmental fund basis financial statements to the accrual basis used in the government-wide state- ments. Generally government-mandated and voluntary nonexchange transactions recognize revenue in the same time periods and no worksheet entries are needed. Property, sales, and income taxe s deferred under the available criteria will require worksheet entries to convert to the accrual basis. When converting to government-wide statements, governments need to exam- ine all revenue sources to see which should be accrued. Assume, for the Village of Elizabeth, the only revenue that needs adjustment is property taxes. Chapter 4 reflected property tax revenue of $3,178,800 (See Illustration 4–5). Entry 27 of the General Fund example in Chapter 4 indicated that the Village deferred $40,000 in property tax revenues because that amount was not considered “available.” Assume it is determined that the property tax levy is for 2012 and should be entirely rec- ognized in that year in the government-wide statements. An adjustment would be required to convert to the accrual basis: Debits Credits 8a. Deferred Revenues—Property Taxes . . . . . . . . . . . . . . . . . . . . 40,000 Revenues—Property Taxes . . . . . . . . . . . . . . . . . . . . . . . . . 40,000 Because the deferred revenue at December 31, 2011, is recognized in the 2012 fund-basis statements (see entry 3 in Chapter 4) but would have been recognized through a journal entry similar to 8a in last year’s government-wide statements, an additional worksheet entry is required. That entry debits property tax revenues and credits net assets for the $20,000 recognized as revenue under modified accrual accounting. 8b. Revenues—Property Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . 20,000 Net Assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20,000 cop2705X_Ch08_220-266.indd 230cop2705X_Ch08_220-266.indd 230 2/1/10 5:53:25 PM2/1/10 5:53:25 PM [...]... Statement of Activities Illustration 8–7 reflects the Statement of Activities for the Village of Elizabeth This is the same format as Illustration 2–6, although GASB does permit different formats cop2705X_Ch08_220-266.indd 241 2/1/10 5:53:26 PM 242 cop2705X_Ch08_220-266.indd 242 cop2705X_Ch08_220-266.indd 242 ILLUSTRATION 8–7 Statement of Activities VILLAGE OF ELIZABETH Statement of Activities For the... to determine what governments should do in the event of an unexpected decline in the usable capacity of a capital asset GASB Statement 42, Accounting and Financial Reporting for Impairment of Capital Assets and for Insurance Recoveries, establishes guidance for the reporting of impairment of capital assets Statement 42 provides a two-step process for determining whether an asset is impaired Step 1:... discontinued use of a capital asset However, a decrease in the demand for a particular service does not (in and of itself) indicate impairment Step 2: Test for Impairment ing factors are present: Impairment is deemed to exist if both of the follow- 1 The decline in the service utility is unexpected (not part of the normal life cycle of an asset) 2 The amount of the decline in service utility is large For example,... Statement of Activities (Illustration 8–7) Again, the elements in the reconciliation are generated in earlier sections of this chapter cop2705X_Ch08_220-266.indd 245 2/1/10 5:53:27 PM 246 Chapter 8 ILLUSTRATION 8–9 Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances of Governmental Funds to the Statement of Activities VILLAGE OF ELIZABETH Reconciliation of the Statement of. .. Apago PDF Enhancer Revenues Property Taxes Motor Fuel Taxes Sales Taxes Interest & Penalties on Taxes Licenses & Permits Fines & Forfeits Investment Income Miscellaneous State Grant for Road Repairs Capital Grant for Fire Station Capital Contributions—Endowment Grant for Law Enforcement Charges for Services Other Financing Sources Proceeds of Bonds Premium on Bonds Transfers In Special Items Proceeds of. .. $350,000 of General Fund intergovernmental revenues were considered a grant for law enforcement • $600,000 was received, through capital projects funds, as a grant for the construction of the police station addition • $350,000 was received, through a special revenue fund, as a state reimbursement grant for road repairs • $300,000 was received as a gift for establishment of a permanent fund for the maintenance... Interfund activities and balances Apago PDF Enhancer The adjusted amounts are then presented in the Governmental Activities sections of the government-wide Statement of Activities and Statement of Net Assets Many of the differences that arise between accrual and modified accrual accounting relate to the capital assets and long-term debt of governmental funds These are often termed General Capital (or Fixed)... item must meet all of the following conditions (from paragraph 27 of Statement 34): • Held for public exhibition, education, or research in furtherance of public service, rather than for financial gain • Protected, kept unencumbered, cared for, and preserved • Subject to an organizational policy that requires the proceeds from sales of collection items to be used to acquire other items for collections... Statement of Net Assets and from the governmental fund Statement of Revenues, Expenditures, and Changes in Fund Balances to the Statement of Activities cop2705X_Ch08_220-266.indd 244 2/1/10 5:53:27 PM Government-wide Statements, Fixed Assets, Long-Term Debt ILLUSTRATION 8–8 245 Reconciliation of the Balance Sheet of Governmental Funds to the Statement of Net Assets VILLAGE OF ELIZABETH Reconciliation of the... Apago PDF Enhancer GOVERNMENT-WIDE FINANCIAL STATEMENTS The GASB requires two government-wide financial statements: the Statement of Net Assets and the Statement of Activities These two statements are presented in this section, using the Village of Elizabeth example presented in Chapters 4 to 7 and continued in the first section of this chapter Statement of Net Assets The Statement of Net Assets for . . . . . . . . . . . . . . 55,000 cop2705X_Ch08_220- 266 .indd 236cop2705X_Ch08_220- 266 .indd 2 36 2/1/10 5:53: 26 PM2/1/10 5:53: 26 PM Apago PDF Enhancer Government-wide Statements, Fixed Assets,. Statement of Net Assets. For cop2705X_Ch08_220- 266 .indd 231cop2705X_Ch08_220- 266 .indd 231 2/1/10 5:53:25 PM2/1/10 5:53:25 PM Apago PDF Enhancer 232 ILLUSTRATION 8–3 Panel A: Classes and Timing of Recognition. Out cop2705X_Ch08_220- 266 .indd 234cop2705X_Ch08_220- 266 .indd 234 2/1/10 5:53: 26 PM2/1/10 5:53: 26 PM Apago PDF Enhancer Government-wide Statements, Fixed Assets, Long-Term Debt 235 is investment income of $3,000.