Exam 5: Recognizing Expenditures in Governmental Funds

This year,Port City was sued for injuries sustained when a citizen slipped and broke her hip on the icy City Hall steps.The city attorney estimates the city will be held liable by the courts and a judgment of $300,000 will result.Because of the nature of the case it will likely be four years before the city makes any payment related to the accident.The present value of the likely future payment is $251,000.In the government-wide financial statements,at the end of the current fiscal year,Port City should recognize a liability of

Culver City recognizes as revenues/expenditures those amounts collected/paid during the year or within 60 days of fiscal year-end.The city offers a pension benefit to its employees who meet certain age and years of employment criteria.The city participates in the State Pension Plan.Per its contractual arrangement,the city's required contribution to the State Pension Plan for the fiscal year ended 6/30/15 is $5 million.Due to cash inflow shortages the city,which budgeted $5 million for pension contributions,paid only $4 million in the fiscal year ended 6/30/15.The city paid the remaining amount on September 30,2015.Assuming the city maintains its books and records in a manner that facilitates the preparation of government-wide financial statements,how should the city record the pension contribution and any associated liability for the year ended 6/10/15?

Star City leased a bulldozer for use in activities accounted for in the general fund.The city paid $40,000 and agreed to pay $40,000 per year for 3 years.The bulldozer has a useful life of six years.The lease qualified as a capital lease.Assuming that the city maintains is books and records in a manner that facilitates the preparation of the government-wide financial statements,the appropriate entry at the date of acquisition would be

The amount of sick leave expenditures that should appear on the general fund financial statements for the fiscal year ended 6/30/15 is

Expenditures are generally recognized when resources are acquired;expenses when resources are consumed.