Exam 10: Pensions and Other Fiduciary Activities

Investment trust funds are one of four types of fiduciary funds. What is the purpose of investment trust funds? What is the nature of the assets and liabilities that they report? Can the government that provides an investment trust fund invest its own assets in that fund?

Maple City has a permanent fund that reported current-year investment earnings (realized and unrealized) of $80,000. The endowment principal is $800,000 and the city council has adopted a policy of considering only the inflation-adjusted rate of return to be available for transfer to the recipient fund. During the current year the council declared the inflation-adjusted rate of return to be 8 percent. How much revenue would be recognized in the permanent fund?

Accounting for the employer's contribution to a defined benefit pension plan is straight forward, because the employer is obligated only to make annual contributions in the amount specified in the plan terms.

Kilmore City received a cash gift of $125,000 from a citizen who specified that the gift must be used to support recreational activities for the city's youth. The city accounted for this gift in the appropriate fund. During the year the city engaged in the following activities. REQUIRED: Prepare the appropriate journal entries. Be sure to indicate in which fund the entries should be recorded. a) The city accepted the donation. b) The city engaged in a fund-raising effort to provide additional funds to support youth recreational activities and raised $6,000 in pledges. The city collected $2,000 in cash with the remaining pledges collectible shortly after the end of the year. c) The city temporarily invested $50,000 of the gift in marketable securities. d) The city spent $26,000 on goal posts, nets, etc., for a soccer field. e) The city received $2,000 in dividends and interest earned on the temporary investment. f) At year-end the temporary investments had a market value of $51,000. g) The city closed the revenue and expense accounts.

The liabilities related to benefits and refunds of a defined benefit pension plan are reported in a government's fiduciary fund financial statements using the

Assets reported in a government's investment trust fund should include:

Lomond City receives a federal grant to assist in nutrition programs for its senior citizens. The city will select the contractors that will provide meals and approve the participants in the program. The proceeds of this grant should be accounted for in which of the following funds of the city?

A wealthy citizen provided in her will for a gift of cash and other assets to Balsa City. The will specified that the gift was to be kept intact and that the earnings from the gift were to be used to support public parks. At the time of the donation, the gift had a book value in the hands of the donor of $300,000 and a fair value of $500,000. When recording this gift the city would credit

The fiduciary fund financial statements in a government's annual financial report comprise

A government receives a gift of cash and investments with a fair value of $200,000. The donor specified that the earnings from the gift must be used to beautify city-owned parks and the principal must be re-invested. The $200,000 gift should be accounted for in which of the following funds?

On its year-end statement of financial position, the charity would report non restricted net assets of:

Liabilities reported in pension trust funds consist of

Citizens within a defined geographic area of Dolan City created a special assessment district to facilitate the construction of sidewalks. The city was responsible for overseeing the entire construction project. The city issued bonds in its own name to pay the contractor for the construction. However, the city was not responsible in any manner for the bonds. The bonds were secured by the special assessments that are levied against properties within the special assessment district. Collections of special assessments would be recorded in which of the following funds of Dolan City?

Per GASB Statement No. 34, permanent funds are classified as fiduciary funds.

In which of the following funds would the account "net pension obligation" be most likely to appear?

A major difference between defined benefit pension plans and defined contribution pension plans is that

The schedule of changes in long-term obligations contains an account "net pension obligation." Which of the following describes the event that gave rise to this account?

What basis of accounting is used to account for transactions of a government's private-purpose trust fund?

Financial assets reported by investment pools should be reported at

Under GASB standards, agency funds are excluded from the face of the government-wide financial statements. What are agency funds? Do you believe they should be presented in the government-wide statements? Could they--or should they--be presented elsewhere?