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Subject Topic: government wide financial statement? (Topic Closed Topic Closed) Post ReplyPost New Topic
  
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micky201314
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Posted: 26 Feb 2010 at 20:06 | IP Logged  

Government wide financial statement is full accrual, right? Which should be the same as for profit organization. I dont understand why this question calculated in modified accrual approach as in debt service fund. Please help, thank you.

 

The correct answer is D....

 

 

On March 1, Wag City issued 1,000,000, ten year, 6% general obligation bonds at par with no bond issue costs. The bond pay interest September 1 and March 1. What amount of interest expense and bond interest payable should Wag report in its government-wide financial statements at the close of the fiscal year end on December 31?

a.      interest expense 50000, interest payable, 20,000

b.      interest expense 50000, interest payable 0

c.      interest expense 60000, interest payable 10000

d.      interest expense 30000, interest payable 0



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nacol
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Posted: 27 Feb 2010 at 08:50 | IP Logged  

Govt funds such as Debt Svc Fund uses modified accrual

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micky201314
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Posted: 27 Feb 2010 at 10:29 | IP Logged  

yea, the problem is this is Government wide financial statement , which should be use full accrual.



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johnnyutah
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Posted: 27 Feb 2010 at 15:31 | IP Logged  

micky201314 wrote:

Government wide financial statement is full accrual, right? Which should be the same as for profit organization. I dont understand why this question calculated in modified accrual approach as in debt service fund. Please help, thank you.

 

The correct answer is D....

 

 

On March 1, Wag City issued 1,000,000, ten year, 6% general obligation bonds at par with no bond issue costs. The bond pay interest September 1 and March 1. What amount of interest expense and bond interest payable should Wag report in its government-wide financial statements at the close of the fiscal year end on December 31?

a.      interest expense 50000, interest payable, 20,000

b.      interest expense 50000, interest payable 0

c.      interest expense 60000, interest payable 10000

d.      interest expense 30000, interest payable 0

 

The correct answer is 'A' not 'D,' since the government wide financials are full accrual the mat works to answer 'A'. Also, I remember that question from the Becker question set for that section and the answer is 'A'.

Interest Expense = ($1,000,000 x 6%)/12 * 10

Payable (since paid on September 1) = ($1,000,000 x 6%)/12 * 4

Hope that helps.

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meghna
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Posted: 27 Feb 2010 at 22:00 | IP Logged  

Micky..

Debt service funds are based on modified accrual basis of accounting.But the I/E to be reported is calculated on accrual basis as the Government wide financial statements are prepared like-profit(GAAP)accounting.And question clearly asks for I/E for govt wide Financial statements.

Also, there is no expense for Debt service fund in Govt Fund Financial Statements Right?? We have statement of revenues,expenditures and changes in fund balances.And correct answer as mentioned by johnnyutah =I/E- $50,000, I/Payable - $20,000



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