Exam 5: Recognizing Expenditures in Governmental Funds

The City of Roswell has a 6/30 fiscal year-end.The city uses the consumption method for recognizing inventories and prepayments.On July 1, 2014, the city leased computer equipment for use in the city's general activities.The lease is a three-year lease that qualifies as an operating lease.The city prepaid the entire three-year rental fee of $45,000.At June 30, 2015, the appropriate account balances in the general fund associated with this transaction would be

Per GASB standards, governments do not report general capital assets or depreciation in governmental funds.

In a governmental fund, expenditures for wages and salaries should be recognized in the period in which the employees earn them.

State University, a public university, has a policy of granting faculty members a one-year paid sabbatical leave after a period of seven years continuous employment.The leave is for further study, research, or public service.A particular faculty member earns $90,000 per year.Assuming that the college maintains its books and records in a manner that facilitates the preparation of fund financial statements and assuming that any appropriate accruals have been made, what is the appropriate entry to record the employee's salary paid while on sabbatical leave?

This year, Port City was sued for injuries sustained when a citizen slipped and broke her hip on the icy City Hall steps.The city attorney estimates the city will be held liable by the courts and a judgment of $300,000 will result.Because of the nature of the case it will likely be four years before the city makes any payment related to the accident.The present value of the likely future payment is $251,000.In the government-wide financial statements, at the end of the current fiscal year, Port City should recognize a liability of

Employees of the general fund of Scott City earn ten days of vacation for each 12 months of employment.The city permits employees to carry the vacation days forward as long as they wish.During the current year employees earned $800,000 of vacation benefits, of which the city estimates $500,000 will be taken in the next year and the balance will be carried forward.Assuming that the city maintains its books and records in a manner that facilitates the preparation of fund financial statements, which of the following entries should be made in the general fund to record the vacation pay earned during the current period?

Culver City recognizes as revenues/expenditures those amounts collected/paid during the year or within 60 days of fiscal year-end.The city offers a pension benefit to its employees who meet certain age and years of employment criteria.The city participates in the State Pension Plan.Per its contractual arrangement, the city's required contribution to the State Pension Plan for the fiscal year ended 6/30/15 is $5 million.Due to cash inflow shortages the city, which budgeted $5 million for pension contributions, paid only $4 million in the fiscal year ended 6/30/15.The city paid the remaining amount on September 30, 2015.Assuming the city maintains its books and records in a manner that facilitates the preparation of its fund financial statements, how should the city record the pension contribution and any associated liability for the year ended 6/30/15?

Star City leased a bulldozer for use in activities accounted for in the general fund.The city paid $40,000 and agreed to pay $40,000 per year for 3 years.The bulldozer has a useful life of six years.The lease qualified as a capital lease.Assuming that the city maintains is books and records in a manner that facilitates the preparation of the government-wide financial statements, the appropriate entry at the date of acquisition would be

On July 1, Gilbert County bought computer equipment for use in the administrative offices of the county.The equipment has an estimated useful life of three years and salvage of $10,000.The county has a 6/30 fiscal year-end.Assuming that the county maintains its books and records in a manner that facilitates the preparation of fund financial statements, the $85,000 cost of this equipment would require which of the following entries?

State University, a public university, has a policy of granting faculty members a one-year paid sabbatical leave after a period of seven years continuous employment.The leave is for further study, research, or public service.A particular faculty member earns $90,000 per year.Assuming that the college maintains its books and records in a manner that facilitates the preparation of government-wide financial statements and assuming that any appropriate accruals have been made, what is the appropriate entry to record the employee's salary paid while on sabbatical leave?

Several years ago, Grant County was sued by a former county employee for wrongful discharge.Although it was to be contested by the county, at the time of the lawsuit the attorneys believed that the county was likely to lose and the estimated amount of the ultimate judgment would be $100,000.This year, the case was finally settled with a judgment against the county of $150,000, which was paid.Assuming that the county maintains its books and records in a manner to facilitate the preparation of its government-wide financial statements, the entry in the current year should be

Banker County has outstanding $4 million of term bonds that bear interest at 6 percent payable semiannually each January 30 and July 30.The county's fiscal year-end is 12/31.On December 28, 2015, the County transferred $240,000 to a debt service fund.At December 31, the maximum amount the debt service fund may recognize as interest expenditure is

When a government finances the purchase of a capital asset from a governmental fund, the acquisition is treated as an expenditure and reduces net current financial resources during the year of acquisition.During the years that principal and interest payments are being made on the debt incurred to finance the capital asset acquisition, the principal and interest amounts are also treated as expenditures.This appears to reduce the net current financial resources by twice the cost of the capital asset.Discuss these transactions and their overall effect on the net current financial resources of the government.

The City of Upper Falls accounts for its inventory using the purchases method.During the year the city bought $500,000 of supplies, for which it owed $100,000 at year-end.The city will pay for the supplies from available expendable financial resources.The entry that should be recorded in the city's general fund is

Employees of the general fund of Scott City earn ten days of vacation for each 12 months of employment.The city permits employees to carry the vacation days forward as long as they wish.During the current year employees earned $800,000 of vacation benefits, of which the city estimates $500,000 will be taken in the next year and the balance will be carried forward.Assuming that the city maintains its books and records in a manner that facilitates the preparation of government-wide financial statements, which of the following entries should be made to record the vacation pay earned during the current period?

Several years ago, Durham City issued $1 million in zero coupon bonds due and payable in 2023.The bonds were sold at an amount to yield investors 6 percent over the life of the bonds.During the current year, how much in interest expenditures should Durham City recognize related to these bonds?

The City of Hiawatha issued $10 million of term bonds as of April 1, 2014.The bonds bear interest at 6 percent, due and payable each October 1 and April 1.Assuming the city maintains its books and records in a manner that facilitates the preparation of its fund financial statements the appropriate entity to record interest on the debt at June 30, 2015 (the city's fiscal year-end)is

If recording a general long-term liability in a governmental fund upon issuing a bond, the credit should be to a bonds payable account.

Assume that the City of Juneau maintains its books and records to facilitate the preparation of its fund financial statements.The city pays its employees bi-weekly on Friday.The fiscal year ended on Wednesday, June 30.Employees had been paid on Friday, June 25.The employees paid from the general fund had earned $90,000 on Monday, Tuesday, and Wednesday (June 28, 29, and 30).What entry, if any, should be made in the city's general fund on June 30?

Shoshone County uses the consumption method to account for supplies.At the beginning of the year the city had no supplies on hand.During the year the city purchased $450,000 of supplies for use by activities accounted for in the general fund.The city used $300,000 of those supplies during the year.At fiscal year-end the appropriate account balances on the government-wide financial statements would be