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Subject Topic: Government related question (Topic Closed Topic Closed) Post ReplyPost New Topic
  
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salone
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Posted: 22 Mar 2009 at 21:26 | IP Logged  

A is the answer.  Because we are dealing with the G/funds.
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divyagovil1
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Posted: 22 Mar 2009 at 22:17 | IP Logged  

ga527940 wrote:
I select "A"

salone wrote:
A is the answer.  Because we are dealing with the G/funds.

So, what would be the appropriate accounting treatment then if not revenue?

What could be the journal entry for the proceeds from the sale of capital assets in governmental fund accounting?

It would be helpful to know the correct accountng treatment. Thanks !



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Passed using Becker Review :
FAR - 04/11/09 - 94
BEC - 05/30/09 - 86
REG - 08/29/09 - 95
AUD - 11/21/09 - 92
Ethics - 2011
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divyagovil1
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Posted: 23 Mar 2009 at 23:58 | IP Logged  

I contacted Becker Academic Support.... According to their response, proceeds from the sale of capital assets in governmental accounting would be classified as "Miscellaneous Income"

If they are sold, they would no longer be part of the Governments Financials.

The entry would be

Dr Cash XXX
CR Miscellaneous Income XXX

There would be a memo entry to remove it from the Fixed Asset account group which in fact would eliminate it from Government Wide reporting.

Thus, the answer can't be a.) as miscellaneous income would be a part of Revenue.

I select the answer as b.) Other financing source ....

Anyone with different thoughts? if yes, please provide the JE as well.

Thanks!



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Divya - CO State

Passed using Becker Review :
FAR - 04/11/09 - 94
BEC - 05/30/09 - 86
REG - 08/29/09 - 95
AUD - 11/21/09 - 92
Ethics - 2011
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minstek
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Posted: 19 Jul 2009 at 10:25 | IP Logged  

I would agree with Divya.

 

The original entry in the governmental fund to record the purchase of equipment is

Expenditure ............XXX

Cash ............................XXX

(if paid for by cash)

Expenditure.............XXX

Other Financing Source ... XXX

(if paid for by capital lease)

The sale would be as follows

Cash ....................XXX

Revenue .....................XXX

Because in governmental funds FA are expenditured, the sale of them would be revenue.

If you think about B, an Other Financing Source, the only time this is usually recorded is financing and transfers, therefore this really doesn't fit.

The special item designation would be to remember to remove it from the government wide statements, I guess.

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