Exam 6: Accounting for Capital Projects and Debt Service

Use the following information to answer question Due to changes in the prevailing interest rates, Washington County has decided to issue new 5% bonds and place the proceeds with a trustee in a manner structured to satisfy all the GASB requirements for an in-substance defeasance of an existing 6.5% bond issue.The 6.5% bonds were originally issued to fund highway projects and the debt is reported in the Schedule of Long-term Obligations and in the governmental activities column of the government-wide financial statements.The old 6.5% bonds are still actively traded in the bond market and will be until their maturity.The new 5% bonds will be sold to an institutional buyer who may also sell them in the bond market. -Assuming that the government is not obligated in any manner, the debt service transactions of a special assessment bond issue should be reported in an

Six years ago Hill City issued $10 million of 6% term bonds, due 30 years from the date of issue.Interest on the bonds is payable semi-annually on January 1 and July 1.Hill City has a September 30 fiscal year end.The amount of interest payable that would be included on the balance sheet for the debt service fund of Hill City at September 30 would be

Use the following information to answer question Due to changes in the prevailing interest rates, Washington County has decided to issue new 5% bonds and place the proceeds with a trustee in a manner structured to satisfy all the GASB requirements for an in-substance defeasance of an existing 6.5% bond issue.The 6.5% bonds were originally issued to fund highway projects and the debt is reported in the Schedule of Long-term Obligations and in the governmental activities column of the government-wide financial statements.The old 6.5% bonds are still actively traded in the bond market and will be until their maturity.The new 5% bonds will be sold to an institutional buyer who may also sell them in the bond market. -A governmental entity has elected to issue new debt and use the proceeds to redeem existing debt because there is an economic gain in doing so.There is, however, an "accounting loss" associated with these events.An accounting loss is defined as

Salt City issued $5 billion of bonds at face value to fund the reconstruction of the major interstate highways in and around their city.The bond underwriters withheld $2 million for underwriting fees and remitted the balance to the City.Assuming the City maintains its books and records in a manner that facilitates the preparation of fund financial statements, how would the underwriting fee be accounted for in the capital projects fund?

Use the following information to answer questions Voters in Lincoln School District approved the construction of a new high school and approved an $8 million bond issue with a stated rate of interest of 6% to fund the construction.Bids were received and the low bid was $8 million.When the bonds were issued, they sold for face value less bond underwriting fees of $.5 million.The School Board voted to fund the balance of the construction by a transfer from the general fund. -The entry in the capital projects fund to record the additional funding for the construction would be

Use the following information to answer questions Calhoun County makes annual transfers from the general fund to the debt service fund to pay principal and interest on long-term debt. -When the County makes the transfer the entry in the debt service fund should be

In which fund type would a governmental entity's capital projects fund be found?

Previously Rose City issued bonds with a face value of $10 million to construct a new city maintenance facility.Assuming that the City maintains its books and records in a manner that facilitates the preparation of the fund financial statements, what is the appropriate entry when the City receives a progress billing from the contractor?

When bonds are issued at a premium, the capital projects fund can transfer those excess resources to the debt service fund.

The City of Twin Falls issued $5 in special assessment bonds to finance major reconstruction of the turbines and facilities used in generating electricity that is sold to the citizens in the surrounding area.The electric power distribution activities are accounted for in an Enterprise Fund.The Enterprise Fund will service the debt.If the City is NOT legally obligated for the debt, the appropriate entry in the City's Electric Enterprise Fund to record this event is

Use the following information to answer question The voters in Ohio City approved the construction of a new city hall building and approved a $10 million bond issue with a stated rate of interest of 6% to fund the construction.When the bonds were issued, they sold for 99.Assuming that the City's has agreed to transfer money from its General Fund to make up the difference, what are appropriate entries related to the discount? -In the capital projects fund

Use the following information to answer questions Lewis County uses a fiscal agent to distribute payments of interest to bondholders.Interest payments are due on July 1 of each year.The fiscal agent requires the County to transfer by June 20 the cash necessary to make the July 1 payments. -How would Lewis County account for the amount transferred on June 20 if the County maintains its books and records in a manner that facilitates the preparation of the fund financial statements?

Use the following information to answer questions Voters in Lincoln School District approved the construction of a new high school and approved an $8 million bond issue with a stated rate of interest of 6% to fund the construction.Bids were received and the low bid was $8 million.When the bonds were issued, they sold for face value less bond underwriting fees of $.5 million.The School Board voted to fund the balance of the construction by a transfer from the general fund. -The entry in the capital projects fund to record the receipt of the bond proceeds would be

When governments establish capital projects funds, they may choose to maintain a separate fund for each major project, or they may choose to combine two or more projects in a single fund.

The City of Twin Falls issued $5 in special assessment bonds to finance major reconstruction of the turbines and facilities used in generating electricity that is sold to the citizens in the surrounding area.The electric power distribution activities are accounted for in an Enterprise Fund.The Enterprise Fund will service the debt.If the City is legally obligated for the debt, the appropriate entry in the City's Electric Enterprise Fund to record this event is