Exam 17: Accounting for State and Local Governments

A five-year lease is signed by the City of Wachovia for equipment with a seven-year life. The asset will be returned to the lessor at the end of the lease. The present value of the lease is $20,000, and annual payments of $5,411.41 are payable beginning on the date the lease is signed. The interest portion of the second payment is $1,604.75. The equipment is to be used in City Hall and was purchased from appropriated funds of the General Fund. What should be recorded in the General Fund on the date the lease is signed?

What is meant by the term legally independent?

The City of Wetteville has a fiscal year ending June 30. Examine the following transactions for Wetteville: (A.) On 6/1/11, Wetteville enters into a 5-year lease on a copying machine. The lease meets the criteria of a capital lease and carries an implied interest rate of 10%. The copier has a present value of $2,300. Wetteville has to put a $300 down payment on the lease at the beginning of the lease with monthly payments thereafter of $42.49. (B.) On 6/5/11, Wetteville opens a new landfill. The engineers estimate that at the end of 10 years the landfill will be full. Estimated costs to close the landfill are currently at $3,500,000. (C.) On 6/15/11, the end of the two-week pay period, Wetteville has $20,000 in accrued vacation pay related to the payroll for the period. The city estimates that $5,000 of this pay will be taken by the end of this summer and the rest will be used next summer. (D.) On 6/18/11, Wetteville receives a donation of a vintage railroad steam engine. The engine will be put on display at the local town park. A fee will be charged to actually climb up into the engine. The engine has been valued at $500,000. (E.) On 6/30/11, Wetteville makes its first payment on the leased copier. The $42.49 payment includes $16.68 interest. (F.) On 6/30/11, Wetteville estimates that the landfill is 2% filled. Required: Prepare the journal entries for the above transactions, on the dates mentioned for each lettered item, for the purposes of preparing the government-wide financial statements.

The Town of Wakefield opened a solid waste landfill in 2010 that was at 20% capacity on December 31, 2010 and at 50% capacity on December 31, 2011. The city initially anticipated closure costs of $2.3 million but in 2011 revised the estimate of the closure costs to be $2.7 million. None of these costs will be incurred until the landfill is scheduled to be closed. Assuming the landfill is recorded within the General fund, what is the journal entry that should be recorded in the Fund Financial Statements on December 31, 2011?

Marie Todd works for the City of Rochester and volunteered to work the New Years Eve holiday in December, 2010. In exchange for working the holiday, the city will grant her 2 vacation days compensated at $500 per day. Marie decided to take these vacation days during January, 2011. For Government-wide financial statements, what are the journal entries to record these events in 2010 and in 2011?

A five-year lease is signed by the City of Wachovia for equipment with a seven-year life. The asset will be returned to the lessor at the end of the lease. The present value of the lease is $20,000, and annual payments of $5,411.41 are payable beginning on the date the lease is signed. The interest portion of the second payment is $1,604.75. The equipment is to be used in City Hall and was purchased from appropriated funds of the General Fund. What entry should be made for the government-wide financial statements on the date the lease is signed?

A city starts a solid waste landfill during 2010. When the landfill was opened the city estimated that it would fill to capacity within 5 years and that the cost to cover the facility would be $1.5 million which will not be paid until the facility is closed. At the end of 2010, the facility was 20% full, and at the end of 2011 the facility was 45% full. If the landfill is judged to be a governmental fund, what liability is reported on the fund financial statements at the end of 2011?

Which statement is false regarding the Balance Sheet for Fund Financial Statements?

Which criteria must be met to be considered a special purpose government? (1.) Have a separately elected governing body (2)) Be legally independent (3)) Be fiscally independent

The employees of the City of Raymond earn vacation compensation that totals $1,500 per week. During 2011, $30,000 in vacation time was taken and the remainder is expected to be used during the latter part of next year. In the government-wide financial statements, assuming there was no beginning balance, what liability should be reported at the end of 2011?

A city starts a solid waste landfill during 2010. When the landfill was opened the city estimated that it would fill to capacity within 5 years and that the cost to cover the facility would be $1.5 million which will not be paid until the facility is closed. At the end of 2010, the facility was 20% full, and at the end of 2011 the facility was 45% full. On government-wide financial statements, which of the following are the appropriate amounts to present in the financial statements for 2011?

A method of depreciation for infrastructure assets that allows the expensing of all maintenance costs each year instead of computing depreciation is called

Which statement is false regarding the Statement of Revenues, Expenditures, and Changes in Fund Balance when it is included with government-wide financial statements?

What is meant by the term fiscally independent?

The city operates a public pool where each person is assessed a $2 entrance fee. Which fund is most appropriate to record these revenues?

What information is required in the financial section of a state or local government's CAFR?

The City of Kamen maintains a collection of paintings of a former citizen in its City Hall building. During the year, one painting was purchased by the city for $2,000 at an auction using appropriated funds in the General Fund. Also during the year, a donation of a painting valued at $3,000 was made to the city and the city has appropriately decided to record this painting as an asset. Required: Prepare the journal entry/entries for the two transactions for the purposes of preparing the government-wide financial statements.

Which of the following is not a criterion of a capital lease?

The employees of the City of Raymond earn vacation compensation that totals $1,500 per week. During 2011, $30,000 in vacation time was taken and $48,000 is expected to be used during the latter part of next year. On fund financial statements, what liability should be reported at the end of 2011?

Which of the following is a section of the general purpose external financial statements of a state or local government? (1) Management's discussion and analysis (MD&A). (2) Required supplementary information (other than MD&A). (3)) Basic financial statements and notes to financial statements.