Exam 8: Long-Term Obligations

Overlapping debt refers to the obligations of property owners within a government's boundaries for their proportionate share of the debt of other governments with overlapping geographic boundaries.

Flora City is accumulating financial resources that are legally restricted to payments of general long-term debt principal and interest maturing in future years.At year-end,$7,000,000 has been accumulated for principal payments,and $2,200,000 has been accumulated for interest payments.These restricted funds should be accounted for in the a) \ 0 \ 9,200,000 b) \ 9,200,000 \ 0 c) \ 2,200,000 \ 7,000,000 d) \ 7,000,000 \ 0

Revenue debt is secured only by designated revenue streams.

Which of the following funds is most likely to receive the proceeds of revenue bonds?

Per GASB Statement No.34,governments generally should report their bonds,notes,and comparable long-term obligations at present value.

Voters of Valdez School District,a public school district,approved construction of a new high school at a cost not to exceed $20 million.The district will finance the construction by issuing $20 million of 6 percent term bonds payable in 20 years.Because the site had already been prepared,the school district began construction immediately but the bonds would not be issued for nearly a year.Shortly before the fiscal year-end,the school district borrowed $5 million from a local bank due in one year with interest at 6.2 percent.The note will be repaid from bond proceeds.The school district secured a financing agreement with the bank to convert the debt to a 10-year debt if the school district is unable to sell the bonds by the due date.At year-end,how should the $5 million note be displayed in the governmental fund financial statements?