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CPA N2009
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Joined: 10 Jul 2009
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Posts: 299

Posted: 21 Sep 2009 at 09:28 \| IP Logged

I agree with Bryis - Becker 2009 F8-18 states:

Derived Tax Revenues:

(1) Derived (non-exchange) tax revenue represents taxes imposed on or derived from exchange transactions such as commerical sales (sales taxes), taqxpayer income (income taxes), etc.

(2) Revenues are recognized when measurable and available.

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cpa_guy
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Joined: 02 Jan 2010
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Posted: 30 Jan 2010 at 12:40 \| IP Logged

lakshmip wrote:

Derived tax revenues should be recognised in the government wide financial statement s in the accounting period in which :

A.It is budgeted

B.Information about them becomes available.

c.The exchange occurs

D.It is collected.

I came accross this topic and it's very interesting. I've been thinking about this question and came up with the answer D; however, it could also be B. I researched derived taxes on the net and found this - "Derived revenues are recognized in both government-wide and government-fund accounting when the underlying event occurs -- or on a periodic basis thereafter. A sale generates a sales tax, which may be recognized before it is collected. Fund accounting adds that the tax must be available for spending either by the receipt of cash OR by a tax-anticipation note for the tax to be recognized as revenue."

Receipt of cash - "It is collected" or tax-anticipation note - "Information about them becomes available"

Therefore, the answer could either be B or D. Correct? Hmmmm?

fendi
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Posted: 15 May 2010 at 16:44 \| IP Logged

If u have Wiley book 2010 on page 824- Derived tax revenues

Averalis
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Joined: 07 May 2010
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Posts: 93

Posted: 15 May 2010 at 20:20 \| IP Logged

I just found the problem in Gleim and it has the answer
listed as when the exchange occurs.

Quote:

"Under the accrual basis of accounting, revenue
from an exchange or exchange-like transaction should be
recognized when the exchange occurs. Revenue from a
nonexchange transaction is recognized in accordance with
the classification of the transaction. Under the accrual
basis of accounting, revenues derived from tax revenues
are recognized when the underlying exchange transaction
occurs."

Under fund accounting though, I believe the answer would
be when collected.

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