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Subject Topic: Government Accounting (Topic Closed Topic Closed) Post ReplyPost New Topic
  
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yashikaahluwali
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Posted: 21 Jul 2010 at 12:01 | IP Logged  

In 2009, Beech City issued $400,000 of bonds, the proceeds of which were restricted to the financing of a capital project.  The bonds will be paid wholly from special assessments against benefited property owners.  However, Beech is obligated to provide a secondary source of funds for repayment of the bonds in the event of default by the assessed property owners.  In Beech's basic financial statements, this $400,000 special assessment debt should


< id="Answer" value="5163" name="Answer" ="">A. Not be reported.
< id="Answer" value="5164" name="Answer" ="">B. Be reported in the General Fund.
< id="Answer" value="5165" ="" name="Answer" ="">C. Be reported in the government-wide statements only.
< id="Answer" value="5166" name="Answer" ="">D. Be reported in an agency fund

The answer is C and why not B.Help !
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1tryCPA
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Posted: 21 Jul 2010 at 12:25 | IP Logged  

LT general liability is only reported on goverment-wide statements as it's not liability to be covered by current resources.

I think entries for this would be in captial project fund:

Cash 400,000

       Other financial sources 400,000

Entries in debt fund  would be when payments are due for principal and interest

and on GW, would be like for a regular  bond

Cash 400,000

     Bonds Payable 400,000

So, leads to answer C

If the city was not obligated to pick up the debt if defaulted, then, the whole thing would be reported in agency fund.

 



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yashikaahluwali
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Posted: 21 Jul 2010 at 13:10 | IP Logged  

Thanks for the explanation, but like you mentioned cash is being debited twice, is it not double counting? I mean since GW financial would ultimately reflect cash $400,000 twice. Am I talking sense?
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1/2 CPA
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Posted: 21 Jul 2010 at 13:31 | IP Logged  

Question for anyone. I am taking FAR July 26 and was wondering if anyone has ever had a simulation on Government or Not for Profit. I am still struggling with these two areas. I believe I will be ok with multiple choice but do not believe I am ready for a sim on these areas.
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yashikaahluwali
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Posted: 21 Jul 2010 at 13:35 | IP Logged  

I am with you. I am struggling too. But forum frnz say its very much possible to have sims. I am using becker it says its possible to have sims on Governmental accounting. 
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