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

A special assessment tax is assessed against all tax payers regardless of who benefits.

A gift of $1,000,000 to a city,to be invested permanently,with the proceeds to be used to maintain the city war memorials should be accounted for in a special revenue fund.

In a Statement of Revenues,Expenditures,and Changes in Fund Balances,Transfers In are reported within Total Revenues.

Use the following to answer the next six questions: During the fiscal year ended December 31, 2015, the City of Johnstown issued 6% general obligation serial bonds in the amount of $2,000,000 at 102 ($2,040,000) and used $1,980,000 of the proceeds to construct a fire station. The $40,000 premium was transferred to a debt service fund. The $20,000 left in the capital projects fund at the end of the project was later transferred to the debt service fund. The bonds were dated April 1, 2015 and paid interest on October 1 and April 1. The first of 10 equal annual principal payments was due on April 1, 2016. -How would the bond sale be recorded?

Use the following to answer the next four questions: On April 1, 2015, the City of Southern Ponds issued $3,500,000 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 $3,490,000 was used to construct the police station, which was completed before December 31, 2015, the end of the fiscal year. The remaining funds were transferred to the debt service fund. The bonds were dated April 1, 2015, and paid interest on October 1 and April 1. The first of 20 equal annual principal payments of $175,000 is due April 1, 2016. -A government signed a five-year capital lease on January 1,2015 to obtain some equipment. The lease provided that the government would make a down payment of $20,000 and four $20,000 payments each year after that,beginning January 1,2016. The government has a fiscal year ending December 31. Upon inception of the lease,the government,in its governmental fund accounting records would:

Which of the following is true regarding accounting for investments of permanent funds?

Special assessments may be levied to finance construction projects or to provide current services.

When a government receives a gift that must be invested permanently and the investment proceeds are used to benefit the government or its citizens,it would be appropriate to account for that gift in a private purpose trust fund.

Permanent funds account for resources that are donor restricted to the extent earnings (but not principal)may be used to support government programs.

Under governmental accounting principles for capital and operating leases; expenditures are recorded each period for the amount of the annual lease payment for all leases,but the expenditures are classified differently for capital and operating leases.

Positive fund balances of capital projects funds are classified as nonspendable,restricted,committed,or assigned.

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."

Siler City receives a trust donation for the purpose of maintaining flower beds in city parks,but the donor does not specify that the principal must be maintained. This type of trust would be most appropriately accounted for in a:

Encumbrance accounting is typically not used for Permanent Funds.

The City of Dundee received a gift of $705,000 from a local resident on April 1,2015 and signed an agreement that the funds would be invested permanently and that the income would be used to maintain the city cemetery. The following transactions took place during the year ended December 31,2015. (a)The gift was recorded on April 1. (b)On April 1,2015,XYZ Company bonds were purchased in the amount of $700,000,at par. The bonds carry an annual interest rate of 5 percent,payable semiannually on October 1 and April 1. (c)On October 1,the semiannual interest was received. (d)From October 1 through December 1,payments were made totaling $16,600 to a lawn service company. (e)On December 31,an accrual was made for interest. (f)Also,on December 31,a reading of the financial press indicated that XYZ bonds had a fair value of $ 703,500,exclusive of accrued interest. (g)The books were closed. Required: A.Record the transactions on the books of the Cemetery Perpetual Care Fund. B.Prepare a separate Statement of Revenues,Expenditures,and Changes in Fund Balances for the Cemetery Perpetual Care Fund for the Year Ended December 31,2015.

Capital projects funds use the financial resources measurement focus and accrual basis of accounting.

Which of the following serial bonds has the first scheduled installment delayed for a period of more than 1 year after the date of the issue?

A special assessment tax is a tax levy that is assessed against only those taxpayers who are deemed to benefit from the service or project paid for by the proceeds of the special assessment levy.

Proceeds of tax supported bonds are recognized in a capital projects fund as a(an):

Unmatured principal installments and accrued interest which is due shortly after year end are required to be reported as liabilities in the debt service fund at year end.