During its fiscal year ending June 30, 20X0, the Parkville Independent School District purchases a two-year insurance policy covering the period May l , 20X0, through April 30, 20X2. Annual premiums are $60,000. The policy specifies that the entire premium for each year is to be paid, in advance, on May l. 1. Prepare journal entries to record the premium payments and the insurance expenditures for fiscal years ending June 30, 20X0, 20Xl, and 20X2, assuming that the district uses the consumption method. 2. Comment on how your entries would differ if the district uses the purchases method.
> A state government provided several grants to school districts and local governments during its fiscal year ending August 31. 1. On August 1, 20Xl, it announced a $2 million grant to a local school district for the purchase of computers. The district can
> Different types of funds justify different practices as to budgets and commitments. Review the budget note to Smith City's financial statements presented in the previous problem. Assume that the city engaged in the following transactions in 20X0 and 20Xl
> Transactions may have significantly different impacts on a government's budget, governmental funds statements, and government-wide statements. A school district prepares its budget on a cash basis. It is contemplating the changes or actions that follow.
> A change to the full accrual basis may have little impact upon reported revenues. A city levies property taxes of $4 billion in June 20Xl for its fiscal year beginning July 1, 20Xl. The taxes are due by January 31, 20X2. The following (in millions) indic
> The "60-day rule" may not be applicable to all types of revenues. Manor County was awarded a state grant to establish evening athletic programs for at-risk youth. The $3.6 million award, to cover the calendar year 20X2, was announced on November 15, 20Xl
> Nonexchange revenues can be of four types. The GASB has identified four classes of nonexchange revenues: • Derived tax • Imposed • Government mandated • Voluntary For each of the following revenue transactions affecting a city, identify the class in whic
> Do conventional financial statements satisfy the objectives of financial reporting? The financial statements that follow were adapted from those of the University of Texarkana. 1. Based on the information included in the financial statements, respond as
> The recognition of revenue from fines does not necessarily reflect the amount "earned" by merely issuing tickets. In August 20Xl, the last month of its fiscal year, Goldwaithe Township issued $88,000 worth of tickets for parking and traffic violations. O
> The dual objectives of assessing inter period equity and ensuring budgetary compliance may necessitate different accounting practices. A city engages in the transactions that follow. For each transaction, indicate the amount of revenue or expenditure tha
> In a particular year, the federal government was affected by the following transactions and events. For each, indicate the amount that it should recognize as an expense during that year. Cite the FASAB principle on which you rely. 1. The government order
> When should the costs of subsidized loan programs be recognized? In 20X0, Congress established a small business direct loan program. The program provides that qualifying businesses can obtain loans at a rate 5 percent below that prevailing on Treasury se
> To help middle-income students finance the cost of their university educations, the Student Loan Authority guarantees student loans made by private banks. By guaranteeing the loans, the agency enables the banks to make the loans at rates far lower than t
> A federal environmental agency engaged in the following transactions during a particular year. 1. It billed corporations for which it provided services $160 million. Of this, it collected $140 million. 2. It levied $150 million in fines and penalties aga
> The financial statements of the Department of Veterans Affairs (VA) contained the following excerpt from a note entitled "Veteran Benefits": Certain Veterans, who die or are disabled from military service-related causes as well as their dependents, recei
> Federal agency financial statements were not discussed in detail in this chapter. Nevertheless, despite some unusual terminology, they are readily understandable. Examine the following financial statements, which are condensed versions of those of a fede
> Review the Statement of Social Insurance, the related notes, and the discussion of social insurance that is reported as "required supplementary information" in the most recent Consolidated Financial Report of the federal government at large. 1. In terms
> Among the most contentious of federal accounting issues is how the Federal Reserve System should be accounted for in the Financial Report of the U.S. Government. 1. Review a recent balance sheet of the Federal Reserve System ("Federal Reserve Banks Combi
> Although not tied to "conventional" accounting reports, detailed information on individual government contracts, grants, and loan guarantees is readily available to the public. Go towww.USAspending.gov. 1. In the latest year for which data are available,
> Sales taxes should be recognized when the underlying event takes p lace. A state requires "large" merchants (i.e., those with sales over a specified dollar amount) to report and remit their sales taxes within 15 days of the end of each month. It requires
> Review the most recent government-wide Consolidated Financial Report. 1. What was the amount of the government's deficit for the year? What was the amount of its net position? 2. What three departments incurred the largest amount of expenses (net)? 3. Wh
> For each of the following assets acquired by federal departments and agencies, indicate how the government should report the asset. If it is to be reported on the government's balance sheets, then state whether it should be amortized or depreciated. Just
> It is a matter of professional judgment whether and how certain entities should be included in the Financial Report of the U.S. Government. Based on the criteria set forth in this chapter and the limited facts presented, indicate which of the following a
> The Dave Health-Care Center (DHCC)was created in 20X0 to provide medical services to low-income residents of Dave Town. DHCC had the following transaction s during the year: 1. It received a pledge from a donor for $20,000, payable in equal installments
> Below are the abridged operating statements of two not for-profit hospitals that serve similar populations. 1. What is the performance indicator of the hospitals? 2. Using the performance indicator, which hospital reported better operations? Does anythin
> Financial ratios are useful in comparing one not-for-profit to another. The data below pertaining to two not-for-profit hospices were taken from GuideStar, an online database (www.guidestar. org) that provides information about not-for-profit organizatio
> JMH (a not-for-profit) Rehabilitation Center engaged in the following transactions during its most recent fiscal year: 1. Michael Vincent donated $625,000 to the hospital to help pay for the purchase of new physical rehabilitation equipment. 2. Albert Ol
> Review the Statement of Activities of Hamilton College for the year ended June 30, 20X0, which is presented in Table 2-11. The statement indicates that during the year net assets increased by $40,604,000. Suppose that you are a member of the college's bo
> Review the financial statements of Hamilton College in Chapter 2, and respond to the fo llowing questions: 1. What percentage of the college's total revenues (including nonoperating items and revenues of all funds) is attributable to tuition and fees (ne
> The initial value to be assigned to an asset is not always obvious. A city acquired general capital assets as follows: 1. It purchased new construction equipment. List price was $400,000, but the city was granted a 10 percent "government discount." The c
> In January 20X0, Kirkland University receives a pledge of $200,000 to be used exclusively to support research in a specialized area of communication disorders. The university's fiscal year ends on July 31. In December 20Xl (the following fiscal year), Ki
> A multi jund balance sheet can readily be recast so that it conforms with FASB standards. Recast the fund balance (net asset) section of the balance sheet so that it presents the fund balances in the two categories required by ASU 2014-09. Show the balan
> Review the financial statements of the March of Dimes for 2019 as presented in Table 12-8. 1. Comment as best you can ( even in the absence of guidelines as to what constitutes norms for comparable foundations) on the fiscal strength of the organization
> The footnote in the financial statements of The Welfare Foundation contain the following note titled " Promises to Give": Unconditional promises to give were as follows at December 31: The discount rates used on long-term promises to give were 3 percent
> In December 20X0, the Consumer Association of America (CAA), a not-for-profit research organization, received a $6 million grant from the Sporting Goods Manufacturers Association (SGMA) to develop a football helmet that will provide better protection aga
> In 20X0, the Northwest Ballet Association (NBA), a not-forprofit performing arts organization, undertook a major capital campaign to fund a new theater, expected to cost $10 million. It was quickly able to raise $6 million, all of which was donor restric
> Financial analysis of governments is not a static tool; rather, it changes as potential issues arise that may be of concern to analysts. Debt analysis, for example, traditionally focused on financial liabilities such as bonds and notes. More recently, ot
> The following information was taken from the ACFRs of two cities of approximately the same size in the same state. 1. Compare the financial condition of the two cities based on the following indicators: a. Per capita operating expenditures b. Per capita
> The data that follow were drawn from the city of Boulder, Colorado's ACFR. They are from two statistical-section schedules showing the mix of revenue and expenditures for a 10-year period. They include amounts only from the general fund, special revenue
> For each of the following indicate the fund (or funds), if any, in which you think the activity should be accounted for and reported. If you think the fund should be a fiduciary fund, then indicate the type of fund; if a governmental or proprietary fund,
> During 20Xl Luling Township engaged in the following transactions related to modernizing the bridge over the Luling River. The township accounts for long-term construction projects in a capital projects fund. • On July 1 it issued 10-year, 4 percent bond
> Upon the death of a police officer, Leff City establishes a trust fund to provide for the education of the officer's collegeage children. 1. In what type of fund should the resources contributed to the fund be recorded? 2. Prepare journal entries to reco
> The Westmont School District provides postemployment health care benefits through a cost-sharing plan administered through the State Teachers OPEE Plan (STOP). In its financial statements for its fiscal year ending May 31, 20Xl, STOP reported that the co
> An individual city employee is currently 50 years of age and anticipates retiring at age 65. Per mortality tables, she is expected to live an additional 18 years postretirement. Taking into account her current salary and anticipated increases, her antici
> The ACFR of North Orange included the statement of fiduciary net position for its employee pension plan presented here: 1. A note to the statement indicated that the plan net position was 75 percent of the North Orange (the employer) total pension liabil
> Lemon County permits employees to accumulate any sick leave that they do not take. If employees do not use accumulated sick leave, then they will be paid for those days upon retirement or termination (up to a maximum of 45 days). In 20Xl, employees earne
> Expenditures for vacations do not necessarily reflect the amounts the employees have earned. In 20Xl, employees of Pecos River County earned $5 million in vacation pay. They were paid for $4.2 million but deferred taking the balance of their earned vacat
> Tax abatements are reductions in taxes that result from an agreement between a government and a taxpayer, typically a corporation. In 20X0, Lionsgate Logistics struck a deal with the city of Des Moines to move its headquarters to a property within the ci
> The amount of revenue to be recognized from grants depends on the type of grant. The following relate to three grants that the town of College Hills received from the state during its fiscal year ending December 31, 20Xl. Prepare journal entries to recor
> Select one of the more recently established (and larger) capital projects funds (a major fund, if there is one).
> Grants are not necessarily recognized as revenue when they are awarded. Columbus City was awarded a state reimbursement grant of $150,000 to assist its adult literacy program. The following were significant events relating to the grant: • The city, which
> Property taxes are not necessarily recognized as revenue in the year collected. The fiscal year of Duchess County ends on December 31. Property taxes are due on March 31 of the year in which they are levied. 1. Prepare journal entries (excluding budgetar
> The Eaton School District engaged in the following transactions during its fiscal year ending August 31, 20Xl. • It established a purchasing department, which would be accounted for in a new internal service fund, to purchase supplies and distribute them
> The Waterville School District has an annual meeting with staff, students, and parents in the summer after the school year to review accomplishments in the school district and financials and address needs for the next school year. The talking points of t
> Different types of assets are accounted for in different ways. The government purchased or constructed the following assets. 1. A monument to honor the sailors who served in the U.S . Coast Guard. 2. Land to be incorporated into a national forest. 3. A t
> The Business Development Corporation (BDC) , a federal agency (fictitious), makes loans to high-tech companies that satisfy specified criteria. The loans are intended to encourage research and development and are made a t rates substantially below market
> The federal government, through its various government agencies, engaged in the following transactions involving revenues. 1. In the middle of its fiscal year, it rented l and to a tenant, another government agency. It signed a one year lease requiring m
> The left-hand column of the following table describes each of seven financial statements that the FASAB recommends agencies prepare. The right-hand column indicates the names of the seven statements. Match the description in the left-hand column with the
> Military hardware should be accounted for as a. Stewardship assets b. Heritage assets c. National defense assets d. General assets 2 . The Executive Office Building has historical significance yet is also used as functioning office space. The cost of the
> The federal government's annual financial statements are issued by a. The Department of the Treasury b. The Office of Management and Budget c. The Department of Commerce d. The Government Accountability Office 2. The Government Accountability Office is p
> In June 20Xl, Jason King completed his audit of a 20X0 grant that a city made to Field of Dreams, a private, not-for-profit organization that sponsors recreational programs for disadvantaged teens. In the course of his testing, King discovered that mater
> Please go to www.Guidestar.org, and download the Form 990 of three health-care organizations for 2018. Note that you will need to create a free account to access the forms: 1. Mental Health America of Greater Houston 2. Southern Illinois Hospital Service
> On June 30, 20X0, a county (government) hospital bought 3,000 shares of stock for $94,000 intending to hold the investment for its proposed expansion of its trauma center. The fair value of the stock on August 31, 20X0, the hospital's fiscal year-end, wa
> A not-for-profit hospital signs a contract with an insurance company in which the company agrees to pay it $6 million in capitation fees for the year July 1, 20X0, through June 30, 20Xl. Between July 1, 20X0, and December 31, 20Xl, the hospital provides
> Windom College, a not-for-profit institution, engaged in the following transactions during its fiscal year ending June 30, 20X0. Prepare appropriate journal entries, indicating the types of funds (by restrictiveness) in which they would be recorded. 1. T
> In June 20X0, a public university bills and collects $30 million in tuition for the summer semester that runs from June 1 through July 15. In addition, in May and June it bills $200 million for the fall semester that runs from September 1 through Decembe
> The objective of this exercise is to get you familiar with the audited financial statements and IRS Form 990 of a Nonprofit Entity, the American Cancer Society (www.cancer.org, click on "About Us," and click on "Financials and Governance") and obtain the
> Discovery Barn, a not-for-profit science center for children, received a contribution of $30,000 explicitly designated for the acquisition of computers. During the year it acquired $21,000 of computers, which it estimated to have a useful life of three y
> The Lung Association received a contribution of marketable securities that were to be placed in a permanent endowment fund. Neither donor stipulations nor applicable state law requires that capital gains or increases in value be added to the endowment pr
> A wealthy alumna donates $500,000 in marketable securities to her alma mater to establish a scholarship fund . Per the trust agreement, only the interest and dividends (including any gains in fair value) from the securities can be distributed to scholars
> For each of the following indicate the type of fiduciary fund in which it is most likely the fiduciary activity should be accounted for and reported. 1. Per a trust agreement a state maintains an investment pool in which governments within the state can
> What was the city's largest expenditure for the fiscal year? By how much did this increase or decrease since the prior year? Can you draw any inferences from this comparison as to the efficiency and effectiveness of the city in providing this service? If
> A city's general fund has an outstanding payable to its electric utility, which is accounted for in an enterprise fund. The utility has a corresponding receivable from the general fund. In the city's government-wide statement of net position, which would
> A city signs a three-year licensing agreement with a software company for use of a payroll management system in its electrical utility fund. Annual charges are $10,000 per year. It is the policy of the city to use a discount rate of 6 percent to value ri
> The accounting for BANs depends on events subsequent to year-end. In anticipation of issuing of long-term bonds, a state issues on May 1, 20Xl, $200 million of 60-day BANs to finance highway construction. It expects to roll over the BANs into long-term b
> What are the four main objectives of federal financial reporting as established by the FASAB?
> Government debts may be reported differently in governmental and government-wide statements. The Alpine school district engaged in the following transactions in its fiscal year ending August 31, 20Xl. By law, the district is required to establish a capit
> What should it use as its discount rate in determining its pension obligation?
> The Office of Management and Budget is responsible for granting agencies apportionments. What are apportionments?
> What is the primary role of the Treasury Department's Bureau of Fiscal Service?
> Into what two categories does the FASAB divide government assets? How are each of the two accounted for?
> What are the basic statements that an agency may have to prepare to be in compliance with FASAB standards?
> What are the key criteria of whether an entity should be accounted for as a "consolidation" entity or a "disclosure" entity?
> Why is the FASAB named an advisory board? What is the relationship between the FASAB and the GAO, the Treasury Department, and the OMB?
> What are tax expenditures, and how must they be reported upon in the federal government's consolidated financial report?
> If an agency makes a loan at a below market rate, what would be the nature of any expense recognized at the time of the loan? If it guaranteed a loan made by others, what would be the nature of any expense recognized at the time of the guarantee?
> Why does it matter whether Social Security is considered a pension plan or an entitlement program? How does the FASAB direct that Social Security be reported? What unique issue does the federal government face in calculating the actuarial value of its So
> Which of the following is true with respect to bankruptcy? a. Per the federal bankruptcy code, a municipality can be declared bankrupt but not insolvent. b. Many major cities have avoided bankruptcy by being placed under the control of financial control
> Suppose that you are the independent auditor for a local not-for-profit performing arts association that recently received a sizable endowment. The association's president has asked whether gains, both realized and unrealized, from the appreciation of en
> What measures might be of more value to donors than the fund-raising ratio?
> What are permanent funds used to account for? In light of the requirement that governmental funds can recognize revenues only when they are measurable and available, how can a permanent fund ever recognize revenue?
> As a general rule, when should a government recognize a fiduciary fund liability to the beneficiaries of the fund? More specifically when should a government that collects taxes on behalf of another government recognize the liability to the beneficiary g
> What is the rationale for the requirement that only resources held for the benefit of parties other than the government itself can be accounted for in a fiduciary fund?
> What are investment pools? Why might a government maintain an investment pool? On what basis are the assets measured and reported?
> In what two basic financial statements should a government report its fiduciary funds? On what basis of accounting should they be prepared?
> What is conduit debt? Who issues debt through these conduits? Why are governments required to report it only in notes to their financial statements, not on their balance sheets?
> Why are bond ratings of vital concern to bond issuers?
> What distinguishes moral obligation bonds from other types of debt? Why would one government assume a moral obligation for another government's bonds?
> Which of the following would be least likely to be classified as a city's general capital assets? a. Roads and bridges b. Electric utility lines c. Computers used by the police department d. Computers used by the department that collects the city's sale
> What special problems do governments face in measuring the income taxes associated with a particular year?
> What are the key distinguishing characteristics of fiduciary funds?
