Questions from Accounting for Government and Non-Profit

Q: A government issues bonds at a discount. Where would the government

A government issues bonds at a discount. Where would the government report the discount on its (a) fund statements and (b) government‐wide statements?

Q: What is arbitrage? Why does the Internal Revenue Service place strict

What is arbitrage? Why does the Internal Revenue Service place strict limits on the amount of arbitrage that a municipality can earn?

Q: Under what circumstances can a government refund outstanding debt and thereby take

Under what circumstances can a government refund outstanding debt and thereby take advantage of a decline in interest rates?

Q: What is meant by an in-substance defeasance, and how

What is meant by an in-substance defeasance, and how can a government use it to lower its interest costs? How must it recognize a gain or loss on defeasance if it accounts for the debt in a proprietar...

Q: Near the end of its fiscal year a school district issues $

Near the end of its fiscal year a school district issues $80 million of bonds to construct a new high school. By year‐end the district has received the proceeds of the bonds and invested them in short...

Q: A city levies a property tax that is restricted for future period

A city levies a property tax that is restricted for future period payments of principal and interest on outstanding debt. The tax receipts are recorded in a debt service fund and are invested in inter...

Q: A city engages in an in‐substance defeasance of long‐

A city engages in an in‐substance defeasance of long‐term bonds and accordingly invests in, and sets aside, the long‐term securities necessary to make the required interest and principles payments on...

Q: Crystal City established a capital projects fund to account for the construction

Crystal City established a capital projects fund to account for the construction of a new bridge. During the year the fund was established, the city issued bonds, signed (and encumbered) $6 million in...

Q: Durwin County issued $200 million in long‐term debt to

Durwin County issued $200 million in long‐term debt to fund major improvements to the county’s road and transportation systems. The debt is to be serviced from the...

Q: The balance sheet and a comparative statement (budget‐to‐

The balance sheet and a comparative statement (budget‐to‐actual) of revenues, expenditures, and changes in fund balance of Parkville’s general obl...