Exam 12: Accounting for State and Local Governments Part 2

The Town of Sitka opened a solid waste landfill in 2020 that was at 25% capacity on December 31, 2020 and at 60% capacity on December 31, 2021. The city initially anticipated closure costs of $2.8 million but in 2021 revised the estimate of the closure costs to be $3.2 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, how would the landfill information be represented in the governmental fund financial statements at December 31, 2021?

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Question 1

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There is nothing recognized in the balance sheet or in the statement of revenues, expenditures, and other changes in fund balance at December 31, 2021 because there is not a claim to any current financial resources.

Madison Township has received a donation of a rare painting worth $1,400,000. For Madison's government-wide financial statements, three criteria must be met before Madison can opt not to recognize the painting as an asset. Which of the following is not one of the three criteria?(1.)The painting is held for public exhibition, education, or research in furtherance of public service, rather than financial gain.(2.)The painting is scheduled to be sold immediately at auction.(3.)The painting is protected, kept unencumbered, cared for, and preserved.

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Question 2

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What are the four steps established by GASB Statement No. 68, Accounting for Financial Reporting for Pensions, in the reporting of a government's liability?

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Question 3

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For pensions, GASB Statement No. 68, Accounting and Financial Reporting for Pensions, established the following steps in the reporting of a government's liability:An actuary estimates the total pension payments that will ultimately be required.The government determines the portion of those payments attributable to past periods of employee service.The government calculates the present value of the payments relating to those past amounts to arrive at its obligation at the current time.If that liability is larger than the net asset position held in the pension trust fund, the excess is shown in the government-wide financial statements as a net pension liability.

The City of Ibiza 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 $3,000 at an auction using appropriated funds in the General Fund. Also during the year, a donation of a painting valued at $3,600 was made to the city.Prepare the journal entry/entries for the two transactions for the purposes of preparing the government-wide financial statements.

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Question 4

A city starts a solid waste landfill during 2020. When the landfill was opened the city estimated that it would fill to capacity within 6 years and that the cost to cover the facility would be $1.8 million which will not be paid until the facility is closed. At the end of 2020, the facility was 15% full, and at the end of 2021 the facility was 35% full.If the landfill is judged to be a governmental fund, what liability is reported on the fund financial statements at the end of 2021?

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Question 5

For the purpose of government-wide financial statements, the cost of cleaning up a government-owned landfill and closing the landfill

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Question 6

Jones College, a public institution of higher education, must prepare financial statements

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Question 7

On December 31, 2020, the City of Oliver leases a large piece of construction equipment with a 25-year life for five years to use during a construction project. After the contract ends, the city must return the equipment to the lessor but has not guaranteed any residual value. The lease requires five annual payments of $40,000 per year beginning immediately. Oliver uses its own incremental borrowing rate of 10 percent per year because it does not know the implicit interest rate the lessor is charging. The present value of a $40,000 annuity due for five years at an annual interest rate of 10 percent is $166,795 (rounded).Prepare the journal entry/entries required for fund financial statements for this lease contract for 2020 and 2021.

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Question 8

Which of the following statements regarding Management's Discussion and Analysis is true?

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Question 9

The City of Wade has a fiscal year ending June 30. Examine the following transactions for Wade:(A.)On 6/5/21, Wade opens a new landfill. The engineers estimate that at the end of 12 years the landfill will be full. Estimated costs to close the landfill are currently $4,800,000.(B.)On 6/18/21, Wade 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 $650,000.(C.)On 6/30/21, Wade estimates that the landfill is 2% filled.Determine and prepare the general fund journal entries for the City of Wade for each lettered item for the purposes of preparing the fund financial statements.

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Question 10

The modified approach to accounting for infrastructure assets may be utilized by a state or local government if:The government accumulates information about all infrastructure assets within either a network or subsystem of a network.The government capitalizes infrastructure assets.The government expenses costs of maintaining the infrastructure assets.The government chooses to depreciate its infrastructure assets.

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Question 11

The city operates a public swimming pool where each person is assessed a $2 entrance fee. Which financial statement is most appropriate to report these revenues?

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Question 12

The Town of Harvest opened a solid waste landfill in 1998 that is filled to capacity in the current year. The city initially anticipated closure costs of $3 million. These costs were not expected to be incurred until the landfill was closed. What is the final journal entry to record these costs assuming the estimated $3 million closure costs were properly recorded and the landfill is accounted for in an enterprise fund?

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Question 13

The City of Athens operates a motor pool serving all city-owned vehicles. The motor pool bought a new garage by paying $34,000 in cash and signing a note with the local bank for $320,000. Subsequently, the motor pool performed work for the police department at a cost of $19,000, which had not yet been collected. Depreciation on the garage amounted to $24,000. The first $14,000 payment made on the note included $5,200 in interest.Required:Prepare the journal entries for these transactions that are necessary to prepare government-wide financial statements.

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Question 14

The Town of Sitka opened a solid waste landfill in 2020 that was at 25% capacity on December 31, 2020 and at 60% capacity on December 31, 2021. The city initially anticipated closure costs of $2.8 million but in 2021 revised the estimate of the closure costs to be $3.2 million. None of these costs will be incurred until the landfill is scheduled to be closed.Prepare the journal entry that should be recorded on December 31, 2021 for government-wide financial statements.

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Question 15

Over the years, four alternatives have been suggested for constructing the financial statements for public colleges and universities. These alternatives include all of the following except:

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Question 16

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

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Question 17

The parking garage and parking lots owned by the City of Barnard reported the following balances for 2021: Required:Prepare the appropriate financial statement for the fund that was used to account for parking operations.

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Question 18

The Town of Portsmouth has at the beginning of the year a $213,000 Net Position balance, and a $52,000 Fund Balance.The following information relates to the activities within the Town of Portsmouth for the year of 2021. Prepare a Statement of Revenues, Expenditures and Other Changes in Fund Balances for the year ended December 31, 2021.

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Question 19

The Town of Portsmouth has at the beginning of the year a $213,000 Net Position balance, and a $52,000 Fund Balance.The following information relates to the activities within the Town of Portsmouth for the year of 2021. Prepare a Statement of Net Position at December 31, 2021.

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Question 20

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What are the four steps established by GASB Statement No. 68, Accounting for Financial Reporting for Pensions, in the reporting of a government's liability?

For the purpose of government-wide financial statements, the cost of cleaning up a government-owned landfill and closing the landfill

Jones College, a public institution of higher education, must prepare financial statements

Which of the following statements regarding Management's Discussion and Analysis is true?

The city operates a public swimming pool where each person is assessed a $2 entrance fee. Which financial statement is most appropriate to report these revenues?

Over the years, four alternatives have been suggested for constructing the financial statements for public colleges and universities. These alternatives include all of the following except:

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

The parking garage and parking lots owned by the City of Barnard reported the following balances for 2021: Required:Prepare the appropriate financial statement for the fund that was used to account for parking operations.

The Town of Portsmouth has at the beginning of the year a $213,000 Net Position balance, and a $52,000 Fund Balance.The following information relates to the activities within the Town of Portsmouth for the year of 2021. Prepare a Statement of Net Position at December 31, 2021.

The Equity Method of Accounting for Investments

Consolidation of Financial Information

Consolidationssubsequent to the Date of Acquisition

Consolidated Financial Statements and Outside Ownership

Consolidated Financial Statements Intra-Entity Asset Transactions

Variable Interest Entities, Intra-Entity Debt, Consolidated Cash Flows, and Other Issues

Foreign Currency Transactions and Hedging Foreign Exchange Risk

Translation of Foreign Currency Financial Statements

Partnerships: Formation and Operation

Partnerships: Termination and Liquidation

Accounting for State and Local Governments Part 1

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