Exam 17: Accounting for State and Local Governments

Which one of the following is a criterion for identifying a primary government?

Which of the following must be presented in the MD&A of a government?

What three criteria must be met before a governmental unit can elect to not capitalize and therefore report a work of art or historical treasure as an asset?

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 in the general fund, on the dates mentioned for each lettered item, for the purposes of preparing the fund-based financial statements.

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-based financial statements, what liability should be reported at the end of 2011?

What are the three broad sections of a state or local government's CAFR?

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

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

The Town of Portsmouth has at the beginning of the year a $213,000 Net Asset balance, and a $52,000 Fund Balance. The following information relates to the activities within the town of Portsmouth for the year of 2011. -Prepare a Statement of Net Assets.

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 is meant by the term fiscally independent?

What is meant by the term legally independent?

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

The city of Nextville operates a motor pool serving all city-owned vehicles. The motor pool bought a new garage by paying $29,000 in cash and signing a note with the local bank for $280,000. Subsequently, the motor pool performed work for the police department at a cost of $17,000, which had not yet been collected. Depreciation on the garage amounted to $20,000. The first $12,000 payment made on the note included $4,800 in interest. Required: Prepare the journal entries for these transactions that are necessary to prepare government-wide financial statements.

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 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(ies) for the two transactions for the purposes of preparing the government-wide financial statements.

Which item is not included on the government-wide Statement of Activities?

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. Assuming that Marie works in an activity reported within the General fund, for Fund-based financial statements, what are the journal entries to record these events?

How is the Statement of Cash Flows for Proprietary Funds similar and dissimilar to a Statement of Cash Flows for a for-profit business?

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 based Financial Statements on December 31, 2011?