Exam 5: Accounting for Other Governmental Fund Types: Capital Projects, Debt Service, and Permanent

With respect to Debt Service Funds,which of the following is true?

A government entered into a capital lease agreement to acquire equipment for the general government on January 1, 2014. Five payments of $8,000 each are to be made, beginning on December 31, 2014. Discounting is at 6%, computed annually. The present value of the five payments is $33,699. -The following are sources of funds for the debt service fund except:

Investments of permanent funds should be reported at fair value,if determinable,and unrealized gains reported along with realized gains as "Investment Income-Net Increase in Fair Value of Investments."

Net assets represented by supplies and prepaid expenses are classified in governmental funds as Nonspendable Fund balance.

Use the following to answer the next four questions: On April 1, 2014, the City of Southern Ponds issued $4,000,000 in 4% general obligation, tax supported bonds at 101 for the purpose of constructing a new police station. The premium was transferred to a debt service fund. A total of $3,990,000 was used to construct the police station, which was completed before December 31, 2014, the end of the fiscal year. The remaining funds were transferred to the debt service fund. The bonds were dated April 1, 2014, and paid interest on October 1 and April 1. The first of 20 equal annual principal payments of $200,000 is due April 1, 2015. -What amount would be reported as debt service expenditures for 2015?

A government entered into a capital lease agreement to acquire equipment for the general government on January 1, 2014. Five payments of $8,000 each are to be made, beginning on December 31, 2014. Discounting is at 6%, computed annually. The present value of the five payments is $33,699. -Which of the following would be true as of January 1,2014?

Private-purpose Trust Funds benefit individuals,private organizations,or other governments.

If a government has debt service due no more than one month after the end of a fiscal year and has the resources available,then it is permitted to accrue expenditures and a fund liability for the debt service.

The City of Presho had the following transactions related to the construction of a new courthouse. (a)1/2/2014: 20 year 4% General Obligation Serial Bonds with a face value of $5,000,000 are issued at 102.Interest and principle payments are made on Jan.1 and July 1 of each year.The premium was transferred into the Debt Service Fund.The General Fund will fully fund each payment as they become due. (b)3/1/2014: Land is purchased for a new courthouse at a cost of $ 300,000. (c)3/1/2014: A contract is signed for construction of the new courthouse in the amount of $ 4,300,000. (d)6/15/2014: Cash ($ 225,000)sufficient to cover interest and principal payments for the year less the premium is transferred from the General Fund. (e)7/1/2014: Interest ($100,000)and principal ($125,000)are paid on the courthouse fund serial bonds. (f)12/1/2014: Receive an invoice for progress completed to date on the courthouse construction project in the amount of $3,700,000. (g)12/27/2014: $97,500 is transferred from the General Fund for the 1/1/2015 interest payment due on the courthouse fund serial bonds.Interest is accrued as of 12/31/2014,following the exception permitted by GASB. Required: Prepare a Statement of Revenues,Expenditures and Changes in Fund Balance for the Capital Projects and Debt Service Funds.Assume this is the first year for each fund (beginning fund balances are zero)and the City has no other long-term debt than that described above.Use separate columns for the two funds

A transfer from the General Fund to a debt service fund to make annual payments on principal and interest would be recorded in the debt service fund as a (an):

With respect to Permanent Funds,which of the following is not true?

Governmental funds,other than the General Fund,are considered major if: I.Total Assets,Liabilities,Revenues,or Expenditures of that individual governmental fund are at least 10% of the corresponding total (assets,liabilities,and so forth)for all governmental funds. II.Total Assets,Liabilities,Revenues,or Expenditures of the individual governmental fund are at least 5% of the corresponding total for all governmental and enterprise funds combined.

What is the difference between a current refunding and advance refunding?

Write yes or no in each box to indicate whether each property applies to the following funds:

Capital Projects funds recognize encumbrances and expenditures,not expenses.

Budgets are typically not recorded for capital projects,debt service,and permanent funds.

Interest revenues should be accrued at year-end on investments held by a permanent fund.

When a government acquires general fixed assets under a capital lease agreement,the asset should be recorded in the General Fund's fund basis financial statements:

The portion of a permanent fund which is spendable should be reported as Unassigned Fund Balance.

Use the following to answer the next four questions: On April 1, 2014, the City of Southern Ponds issued $4,000,000 in 4% general obligation, tax supported bonds at 101 for the purpose of constructing a new police station. The premium was transferred to a debt service fund. A total of $3,990,000 was used to construct the police station, which was completed before December 31, 2014, the end of the fiscal year. The remaining funds were transferred to the debt service fund. The bonds were dated April 1, 2014, and paid interest on October 1 and April 1. The first of 20 equal annual principal payments of $200,000 is due April 1, 2015. -In addition to reporting a $4,000,000 liability and a $40,000 bond premium in the government-wide Statement of Net Assets,how would the bond sale be reported?