smch21beams

8/12/2019 SMch21Beams

1/14

Chapter 21

AN INTRODUCTION TO ACCOUNTING FOR STATE AND LOCAL GOVERNMENTALUNITS PROPRIETARY AND FIDUCIARY FUND

Answers to Questions

1 Enterprise and internal servie !"nds are si#ilar in t$e sense t$at t$eir %perati%ns are li&e t$%se %! si#ilar'"siness enterprises( T$e) "se !"ll ar"al a%"ntin* praties +inl"din* depreiati%n,- $ave a apital#aintenane %r pr%!it %'.etive- are !inaned t$r%"*$ "ser $ar*es- and $ave t$e sa#e !inanial rep%rtin*re/"ire#ents( T$e pri#ar) di!!erene 'et0een t$e t0% !"nd t)pes is t$at an EF pr%vides *%%ds andservies t% iti1ens and "st%#ers %"tside t$e *%vern#ent %n a "ser $ar*e 'asis- 0$ile an ISF pr%videsservies t% %t$er depart#ents and a*enies 0it$in t$e sa#e *%vern#ental "nit +%r %asi%nall) t% %t$er*%vern#ental "nits,(

2 T)pial %perati%ns %! internal servie !"nds inl"de #%t%r p%%ls- entrali1ed ris& !inanin* ativities- datapr%essin* servies- printin* s$%ps- entrali1ed p"r$asin*- repair s$%ps- and st%ra*e %r 0are$%"se%perati%ns( Internal servie !"nds #a) en*a*e in al#%st an) &ind %! %perati%ns t$at %ne 0%"ld !ind inprivate enterprise(

3 An EF +and als% an ISF, is re/"ired t% prepare a state#ent %! net assets- a state#ent %! reven"es-e2penses- and $an*es in net assets +%r !"nd e/"it),- and a state#ent %! as$ !l%0s !%r !air presentati%n ina%rdane 0it$ GAAP( T$e *%vern#ent30ide state#ent %! net assets and state#ent %! ativities '%t$inl"de enterprise !"nd data(

4 In t$e !"nd !inanial state#ents- *%vern#ents inl"de internal servie !"nds 0it$ t$e pr%prietar) !"nds(T$e) are a**re*ated int% a sin*le %l"#n 0it$in t$e pr%prietar) !"nd state#ent %! net assets- t$estate#ent %! reven"es- e2penses- and $an*es in net assets- and t$e state#ent %! as$ !l%0s( 4it$in t$e*%vern#ent30ide state#ents- *%vern#ents rep%rt internal servie !"nds 0it$ t$e *%vern#ental ativities(T$e internal servie !"nd asset and lia'ilit) a%"nts are *enerall) inl"ded in t$e *%vern#ental ativit)%l"#n %! t$e state#ent %! net assets( T$e state#ent %! ativities 0ill inl"de %nl) t$%se internal servie!"nd transati%ns inv%lvin* entities %t$er t$an t$e pri#ar) rep%rtin* entit)( G%vern#ents add e2ternalinternal servie !"nd reven"es and e2pendit"res t% t$e state#ent %! ativities- '"t t$e) e2l"de internal*%vern#ental transati%ns( +See als% 5"esti%n 6(,

5 Internal servie !"nds are never %nsidered #a.%r !"nds and pr%prietar) !"nd state#ents rep%rt internalservie !"nds in a sin*le %l"#n 0it$ t$e enterprise !"nds( Ma.%r enterprise !"nds are rep%rted in a sin*le%l"#n %n t$e pr%prietar) !"nd state#ent %! net assets and state#ent %! reven"es- e2penses- and $an*esin net assets(

6 7ea"se pr%prietar) !"nds a%"nt !%r transati%ns in #"$ t$e sa#e #anner as %##erial '"siness%r*ani1ati%ns- t$e GAS7 all%0s s%#e re!erene t% FAS7 state#ents( GAS7 State#ent N%( 89-:A%"ntin* and Finanial Rep%rtin* !%r Pr%prietar) Ativities-; *%verns 0$i$ a%"ntin* and rep%rtin*standards appl) t% pr%prietar) ativities(

7 It is i#p%rtant t% di!!erentiate 'et0een reven"es *enerated ') inter!"nd transati%ns and transati%ns 0it$

e2ternal parties 'ea"se %! t$e 0a) t$at t$ese transati%ns are rep%rted %n t$e *%vern#ent30idestate#ents( T$e state#ent %! ativities 0ill inl"de %nl) t$%se internal servie !"nd transati%ns inv%lvin*entities %t$er t$an t$e pri#ar) rep%rtin* entit)( T% av%id d%"'le %"ntin* %! inter!"nd transati%ns-*%vern#ents add e2ternal servie !"nd reven"es and e2pendit"res t% t$e state#ent %! ativities- 0$ile t$e)e2l"de internal *%vern#ental transati%ns(

8 First- GASB Statement No. 34#a&es t$e diret #et$%d #andat%r) !%r state#ent presentati%n( Se%nd-GAS7 State#ent N%( < re/"ires separatin* !inanin* ativities int% n%napital and apital related(

2011 Pearson Education, Inc. publishing as Prentice Hall


2/14

9 T$e !id"iar) !"nd ate*%r) inl"des tr"st !"nds +private3p"rp%se- invest#ent- and pensi%n, and a*en)!"nds( T$e) are rep%rted in t$e !"nd !inanial state#ents %nl) in a state#ent %! !id"iar) net assets and astate#ent %! $an*es in !id"iar) net assets(

10 G%vern#ental "nits %!ten pr%vide t$e initial !inanin* %! an ISF t$r%"*$ a %ntri'"ti%n %! as$ %r%peratin* !ailities- e2petin* t$e ISF t% 'e sel!3s"stainin* in !"t"re peri%ds( Alternativel)- t$e*%vern#ental "nit #a) pr%vide a l%an t% t$e ISF t% 'e repaid !r%# !"t"re %peratin* !l%0s %! t$e !"nd( A

%ntri'"ti%n is lassi!ied as a n%nreipr%al trans!er- 0$i$ !l%0s t$r%"*$ t$e state#ent %! reven"es-e2penses- and $an*es in !"nd net assets= 0$ereas a l%an is re%rded as a l%n*3ter# lia'ilit) %! t$e ISF int$e state#ent %! net assets( A *%vern#ent re%rds s$%rt3ter# inter!"nd l%ans as d"e t% F"nd A and d"e!r%# F"nd 7(

11 Private3p"rp%se tr"st !"nds are !id"iar) !"nds "sed t% a%"nt !%r res%"res +%t$er t$an invest#ent p%%lsand e#pl%)ee 'ene!its, t$at are $eld !%r t$e 'ene!it %! parties %"tside t$e *%vern#ental entit)( Per#anent!"nds are *%vern#ental !"nds 0$i$ rep%rt res%"res 0$%se "se is per#anentl) restrited- '"t 0$%seearnin*s are e2penda'le !%r t$e 'ene!it %! t$e *%vern#ent %r its iti1ens(

12 T$e *%vern#ent30ide state#ent %! net assets 0%"ld need at least t$ree %l"#ns%ne !%r *%vern#entalativities +inl"din* t$e *eneral !"nd- speial reven"e !"nds- and internal servie !"nds,- %ne !%r '"siness3t)pe ativities +enterprise !"nds,- and %ne !%r t$e %#p%nent "nit( M%st *%vern#ents als% present %pti%nalt%tal and %#parative t%tal %l"#ns(

13 N%( T$e re/"ired !inanial state#ents !%r a pensi%n tr"st !"nd are a state#ent %! plan net assets and astate#ent %! $an*es in plan net assets( Neit$er %! t$ese state#ents %ntains in!%r#ati%n as t% t$e presentval"e %! !"t"re 'ene!its pa)a'le ') t$e plan( T$ere!%re- t$e state#ents pr%vide n% indiati%n %! 0$et$ert$e plan is ade/"atel) !"nded( T$e state#ents are desi*ned t% re!let t$e :"rrent stat"s; %! t$e plant$enet assets availa'le t% pa) pensi%n 'ene!its and $an*es t$erein( T% deter#ine i! t$e plan is ade/"atel)!inaned- %ne #"st revie0 t$e pensi%n tr"st !"nd s$ed"les- parti"larl) t$e s$ed"le %! !"ndin* pr%*ress-t$at #"st 'e inl"ded in a *%vern#ent>s re/"ired s"pple#entar) in!%r#ati%n( In ?"ne %! 89@@ t$e GAS7iss"ed e2p%s"res dra!t %n ne0 pensi%n rep%rtin* standards( Please see t$e GAS7 0e'site !%r t$e #%st"rrent *"idane $ttpBB000(*as'(%r*B

14 T$e a%"ntin* e/"ati%n !%r an a*en) !"nd is Assets Lia'ilities(

15 I! an enterprise !"nd iss"es de't t$at is 'a&ed ') its reven"e3*eneratin* ativit) +i(e(- reven"e3'a&ed de'tinstr"#ents,- t$e *%vern#ent #"st present ertain detailed se*#ent in!%r#ati%n in t$e n%tes t% t$e!inanial state#ents(

16 Sine t$e *%vern#ent30ide state#ent %! ativities and state#ent %! net assets rep%rt all ite#s "sin* t$ear"al 'asis %! a%"ntin*- %nversi%n 'et0een t$e !"nd and *%vern#ent30ide state#ents is n%tneessar)( Als%- reall t$at *%vern#ents rep%rt internal servie !"nds 0it$ t$e *%vern#ental ativities int$e *%vern#ent30ide state#ents(


21-2
http://www.gasb.org/http://www.gasb.org/http://www.gasb.org/


3/14

SOLUTIONS TO EXE!ISES

So"ution E21#1 So"ution E21#2$AI!%A &'&(te')

So"ution E21#3

1 ' 1 d 1 2 2 d 2 d3 d 3 d 3

4 4 4 '5 d 5 a 5

So"ution E21#4 So"ution E21#5$AI!%A &'&(te')

1 ' 1 d2 a 2 d3 a 3 '4 a 4 '5 5 a

6

So"ution E21#6

!it* o+ L&r&,ee T&- !o""e.tion A/en.* un'State#ent %! Fid"iar) Net Assets

Ta2 C%lleti%n A*en) F"ndat Dee#'er @- 89@@

Assets

Ta2es reeiva'le 9-999

T%tal assets 9-999

Li&i"ities

Lia'ilit) t% Lara#ee @-999

Lia'ilit) t% 7l%%#er C%"nt) @9-999

Lia'ilit) t% 7l%%#er S$%%l Distrit 8-999 T%tal lia'ilities 9-999

T%tal Net Assets 9

S.e'u"e o+ T&-es e.ei&"e

Ta2in* UnitsA#%"nts Certi!ied!%r C%lleti%n C%lleti%ns

7alane atYear End

Cit) %! Lara#ee 9-999 H-999 @-9997l%%#er C%"nt) H9-999 9-999 @9-9997l%%#er S$%%l Distrit @99-999 6-999 8-999

899-999 @9-999 9-999

NOTE T$is s%l"ti%n ass"#es t$at t$e %lleti%n !ee is re%*ni1ed 0$en as$ is %lleted(


21-3


4/14

So"ution E21#7

1 Cas$ -999-999De!erred %peratin* *rant reven"e -999-999

T% re%rd reeipt %! *rant(

De!erred *rant reven"e is rep%rted as a lia'ilit) in t$e 'alane s$eet( Operatin* *rant reven"es

are rep%rted as n%n%peratin* reven"es in t$e peri%d /"ali!)in* %sts are in"rred(

2 E2penses Pr%*ra# A @-899-999V%"$ers pa)a'le +%r Cas$, @-899-999

T% re%rd e2penses in"rred !%r t$e pr%*ra# !inaned ') t$e *rant(

De!erred %peratin* *rant reven"es @-899-999Reven"es %peratin* *rant @-899-999

T% re%rd reven"es earned %n t$e *rant(

N%n%peratin* reven"es %! @-899-999 s$%"ld 'e rep%rted in t$e enterprise !"nd>s state#ent %!reven"es- e2penses- and $an*es in retained earnin*s +!"nd e/"it),(

3 Cas$ 6-999-999De!erred apital *rant 6-999-999

T% re%rd reeipt %! apital *rant(

De!erred apital *rants are rep%rted as a lia'ilit) in t$e 'alane s$eet( 4$en /"ali!)in* %sts arein"rred- t$e de!erred apital *rant lia'ilit) is red"ed and %ntri'"ted apital !r%#inter*%vern#ental *rants- n%t reven"es- is re%*ni1ed(

4 C%nstr"ti%n in pr%*ress H-999-999Cas$ H-999-999

T% re%rd %nstr"ti%n %sts in"rred %n apital *rant pr%.et(

De!erred apital *rant H-999-999C%ntri'"ted apitalapital *rants H-999-999

T% re%rd inrease in %ntri'"ted apital as a res"lt %! in"rrin* /"ali!)in* %sts "nder apital*rant(

T$e inrease in %ntri'"ted apital %! H-999-999 is rep%rted as an additi%n t% %ntri'"ted apital( It d%esn%t a!!et in%#e %r retained earnin*s(

So"ution E21#8

1 Enterprise F"nd2 Capital Pr%.ets F"nd and De't Servie F"nd3 Capital Pr%.ets F"nd and De't Servie F"nd4 Private P"rp%se Tr"st F"nd5 Internal Servie F"nd

6 Enterprise F"nd7 Speial Reven"e F"nd8 General F"nd9 A*en) F"nd10 Invest#ent Tr"st F"nd


21-4


5/14

So"ution E21#9

1 Enterprise FundCas$ H-99

Operatin* Reven"e H-99

2 Agency FundCas$ @8-999

D"e t% %t$er *%vern#ental "nits @8-999

3 Capital ro!ects FundCas$ @-99-999

Ot$er !inanin* s%"re pr%eeds !r%# '%nd iss"e @-99-999

Ot$er !inanin* "se n%nreipr%al trans!er t%De't Servie F"nd 9-999

Cas$ 9-999

"e#t Ser$ice FundCas$ 9-999

Ot$er !inanin* s%"re n%nreipr%altrans!er !r%# Capital Pr%.ets F"nd 9-999

4 ri$ate urpose %rust FundCas$ 9-999

C%ntri'"ti%ns 9-999

Invest#ents 9-999Cas$ 9-999

5 &nternal Ser$ice FundCas$ @9-999

Ot$er !inanin* s%"re N%nreipr%al trans!er !r%# General F"nd @9-999

General FundOt$er !inanin* "se 3 N%nreipr%al trans!er t% Internal Servie F"nd

@9-999

Cas$ @9-999

6 Enterprise FundCas$ @-999-999

7%nds pa)a'le @-999-999


21-5


6/14

So"ution E21#9 +%ntin"ed,

7 Special 'e$enue Fund(Cas$ 9-999

Ot$er Finanin* S%"re Reipr%al trans!er !r%# General F"nd

9-999

General FundOt$er Finanin* Use 3 Reipr%al trans!er t%

Speial Reven"e Ji*$0a) 7ea"ti!iati%n 9-999

Cas$ 9-999

8 General FundTa2es Reeiva'le "rrent -999-999

All%0ane !%r "n%lleti'le ta2es "rrent 9-999Reven"e H-


7/14

1 Cas$ 9-999-999 OFS 3 N%nreipr%al trans!er !r%# General F"nd 9-999-999

2 7"ildin* 8-89-999Cas$ 8-89-999

3 Cas$ -999-999

7%nds pa)a'le -999-999

4 A%"nts Reeiva'le H-99-999C$ar*es !%r servies H-99-999

5 Cas$ H-H99-999A%"nts Reeiva'le H-H99-999

6 7"ildin* i#pr%ve#ents -99-999Cas$ -99-999

7 Salaries e2pense 699-999Cas$ 699-999

8 Interest E2pense H99-999Interest Pa)a'le @99-999Cas$ 99-999

9 Operatin* E2penses @-@99-999A%"nts Pa)a'le @99-999Cas$ @-999-999

10 Depreiati%n E2pense @-99-999A"#"lated Depreiati%n @-99-999

ie'"er !ount* Uti"it* %"&ntAd."sted Trial 7alane

Cas$ -9-999A%"nts Reeiva'le @99-9997"ildin* 8-69-999A"#"lated Depreiati%n @-99-999Interest Pa)a'le @99-999A%"nts Pa)a'le @99-999OFS 3 N%nreipr%al trans!er !r%# General F"nd 9-999-999Pr%eeds !r%# 7%nd Iss"e -999-999C$ar*es !%r Servies H-99-999Salaries E2pense 699-999Interest E2pense H99-999Operatin* E2penses @-@99-999Depreiati%n E2pense @-99-999

H9-69-999 H9-69-999


21-!


8/14

So"ution %21#3

ouwe !ount* otor %oo" un'State#ent %! Reven"es- E2penses-and C$an*es in F"nd Net Assets!%r t$e )ear ended ?"ne 9- 89@8

'e$enuesReven"e !r%# 'illin*s @89-999

E)pensesS"pplies "sed -999Salaries e2pense 8-999Utilities e2pense


9/14

So"ution %21#3+%ntin"ed,

ouwe !ount* otor %oo" un'State#ent %! Cas$ Fl%0s

!%r t$e Year Ended ?"ne 9- 89@8

Cash Flo-s +rom *perating Acti$ities

Cas$ reeived !r%# "sers +pl"*, @86-999Less Cas$ paid t% s"ppliersK +


10/14

So"ution %21#4

Su,,&r* !&".u"&tions +or %rin.i(&" Trust un'

Inrease Derease NetCas$ @99-999

H9-999

9-999

d%natedrentals

'%nds s%ld

99-999

st%& p"r$ase


11/14

So"ution %21#5

u.* !ount* Trust un'State#ent %! C$an*es in Fid"iar) Net Assets

Tr"st F"nd!%r t$e )ear ended ?"ne 9- 89@8

AdditionsC%ntri'"ti%ns 99-999

&n$estment earningsInterestK @-69

T%tal Additi%ns @-69

"eductionsDistri'"ti%ns t% $%#eless s$elters @@-89

T%tal Ded"ti%ns @@-89

C$an*es in Net Assets 96-99Net Assets 'e*innin* %! t$e )ear 9Net assets end %! t$e )ear 96-99

K 99-999 2 H( 2 B@8 @@-89 reeived Mar @99-999 2 H( 2 HB@8 6-99 ar"ed t$r%"*$ ?"n 9

u.* !ount* Trust un'State#ent %! Fid"iar) Net Assets

at ?"ne 9- 89@8

Assets Net AssetsInvest#ents 99-999 Jeld in tr"st !%r end%0#ent 99-999Interest reeiva'le 6-99 Jeld in tr"st !%r $%#eless s$elters 6-99

T%tal assets 96-99 T%tal Net Assets 96-99


21-11


12/14

So"ution %21#6AICPA adapted

!IT O EINENCentral Gara*e F"nd

?%"rnal Entries?"l) @- 89@@ t% ?"ne 9- 89@8

1 Invent%r) %! Materials and S"pplies 6H-999V%"$ers Pa)a'le 6H-999

T% re%rd p"r$ases %n a%"nt(

2 Materials and S"pplies E2pense


13/14

So"ution %21#6 +%ntin"ed,

2 !IT O EINENCentral Gara*e F"nd

Cl%sin* Entries?"ne 9- 89@8

Servie Reven"e 6-999Materials and S"pplies E2pense


14/14

So"ution %21#7

!&"e !ount* Enter(rise un'

State#ent %! Cas$ Fl%0s

!%r t$e Year Ended ( ( (

Cash Flo-s +rom *perating Acti$ities

Cas$ reeived !r%# "st%#ers -86-99

Less Cas$ paid t% s"ppliers +8-

smch21beams

Documents