|Posted: 03 May 2010 at 15:25 | IP Logged
During the year ended Dec 31, year 1, the city of Todd rec’d a state grant to buy a bus and an additional grant for bus operation in Year 1. IN year 1, only 90% of the capital grant was used for the bus purchase, but 100% of the operating grant was disbursed. Todd accounts for its bus operations in an enterprise fund. Todd has incurred the following long –term obligations:
1. General obligation bonds issued for the water and sewer fund, which will service the debt
2. Revenue bonds to be repaid from admission fees collected from users of the municipal recreation center
These bonds are expected to be paid from enterprise funds and to be secured by Todd’s full faith, credit, and taxing power.
IN reporting the state grants for the bus purchases and operation, what should Todd include as grant revenue for the year ended Dec 31, Yr1?
A. 90% of the capital grant (Yes); 100% of the capital grant ( NO); Operation grant ( No)
B. 90% of the capital grant (no); 100% of the capital grant ( yes); Operation grant ( No)
C. 90% of the capital grant (no); 100% of the capital grant ( yes); Operation grant ( yes)
D. 90% of the capital grant (yes); 100% of the capital grant ( no); Operation grant ( yes)
The correct answer is C..my question is how do we know the state grant is voluntary non-exchange transaction or government-mandated non-exchange transaction?? THanks