Exam 12: State and Local Governments: External Financial Reporting

Use the following information to answer Questions bellow: $\text { Here is information for a county government: }$ Governmental funds Enterprise funds Total assets and deferred outflows \ 45,000,000 \ 102,000,000 Total liabilities and deferred inflows 16,000,000 48,000,000 Total revenues 250,000,000 280,000,000 Total expenditures /expenses 242,000,000 160,000,000 $\text { The county has four capital projects funds, with the following characteristics: }$ Road fund Bridges fund Buildings fund Equipment fund Total assets and deferred outflows \ 8,000,000 \ 4,000,000 \ 3,500,000 \ 7,000,000 Total liabilities and deferred inflows 1,500,000 1,200,000 2,000,000 3,000,000 Total revenues 24,000,000 26,000,000 22,000,000 26,800,000 Total expenditures 28,000,000 23,000,000 20,000,000 26,000,000 -Which of these capital projects funds also meet the second criterion for reporting as major funds, and therefore are reported as major funds in the governmental funds financial statements?

Use the following information to answer Questions bellow: At the beginning of fiscal 2019, a county government acquires equipment for $4,000,000. The equipment has an estimated life of 5 years, and straight-line depreciation is used, with no residual value, if appropriate. At the end of fiscal 2020 (two years later), the government disposes of the equipment for $1,800,000. -If the equipment is reported in the general fund, how does it appear in the fiscal 2019 CAFR?

Here are financial statements shown in a city's CAFR: Required For each of the following account titles related to the financial performance of the city, indicate, by statement number, on which of the above eight statements the account appears. The account may be reported on one statement or more than one statement. -Government-wide statement: Statement of activities

For questions bellow, use the numbers from the following financial statements required in a county government's CAFR to identify where the account is reported: 1) Government-wide statement: Statement of net position 2) Government-wide statement: Statement of activities 3) Fund statement: Balance sheet-Governmental funds 4) Fund statement: Statement of revenues, expenditures and changes in fund balances-Governmental funds 5) Fund statement: Statement of net position-Proprietary funds 6) Fund statement: Statement of revenues, expenses and changes in net position-Proprietary funds -On which financial statement(s) are lease obligations of governmental and proprietary funds reported?

Here is information on the results of operations of a local government for the current year: Change in fund balances, governmental funds \ 5,000,000 Increase in internal service net position 100,000 Payments of principal on general long-term debt 1,200,000 Proceeds from issuing general long-term debt 3,000,000 Outlays for general capital assets 2,500,000 Depreciation expense on general capital assets 400,000 The change in net position of governmental activities, reported on the government-wide statement of activities, is:

Use the following information to answer Questions bellow: On April 1, 2020, Summit County issued $10,000,000 in variable rate debt, with interest paid on March 31 of each year, the county's fiscal year-end. The variable rate is adjusted at the beginning of each year. The variable rate for fiscal 2021 was 2.9%. On the same date, the county entered a receive variable/pay fixed interest rate swap, where the county pays a 3.1% fixed rate to a counterparty. The swap qualifies for hedge accounting. At the end of fiscal 2021, the variable rate is reset to 3.2% and the swap has increased in value by $75,000. By the end of fiscal 2022, the variable rate is reset to 3.4%, and the swap has increased in value by $125,000. -Interest expense on the bonds for fiscal 2022, reported on the government-wide statement of activities, is

Use the following information to answer Questions bellow: On April 1, 2020, Summit County issued $10,000,000 in variable rate debt, with interest paid on March 31 of each year, the county's fiscal year-end. The variable rate is adjusted at the beginning of each year. The variable rate for fiscal 2021 was 2.9%. On the same date, the county entered a receive variable/pay fixed interest rate swap, where the county pays a 3.1% fixed rate to a counterparty. The swap qualifies for hedge accounting. At the end of fiscal 2021, the variable rate is reset to 3.2% and the swap has increased in value by $75,000. By the end of fiscal 2022, the variable rate is reset to 3.4%, and the swap has increased in value by $125,000. -Interest expense on the bonds for fiscal 2021, reported on the government-wide statement of activities, is

A county reports the following balances at June 30, 2021, its fiscal year-end, using full accrual accounting: Governmental Business-type (in thousands) activities activities Cash and cash equivalents \ 50,000 \ 7,000 Receivables, net 10,500 4,500 Due from governmental funds -- 3,000 Due from other governmental funds 400 - Inventories 1,000 800 Prepaid expenses 250 - Restricted assets: cash with fiscal agent 15,000 18,000 Capital assets, net 125,000 85,000 Deferred outflows of resources 8,000 3,000 Liabilities 300 Accounts payable 5,000 -- Due to other governmental funds 400 -- Due to enterprise funds 3,000 700 Accrued interest payable 1,500 2,000 Customer deposits - 40,000 Noncurrent liabilities 185,000 3,200 Deferred inflows of resources 500 Additional information (in thousands): 1) $90,000 of noncurrent liabilities for governmental activities were used to acquire capital assets. The noncurrent liabilities for business-type activities were used to acquire capital assets. 2) The net position of governmental activities has the following restrictions: economic development, $21,000; public safety, $1,000; and human services, $450. 3) Business-type activities consist of a water utility. This fund has a total of $20,000 in net position restricted for bond covenants. Required Prepare the county's government-wide statement of net position as of June 30, 2021.

The year-end balance of buildings and equipment of governmental funds is reported

On January 2, 2020, Niagara County issued $25,000,000 in variable rate debt, with interest paid on December 31 of each year. The variable rate is adjusted at the beginning of each year. The variable rate for 2020 was 3.5%. On the same date, the county entered a receive variable/pay fixed interest rate swap, where the county pays a 3.6% fixed rate to a counterparty. By the end of 2020, the variable rate has increased to 3.72% and the swap has increased in value by $150,000. By the end of 2021, the variable rate has fallen to 3.4% and the county closes the swap by paying $20,000 to the counterparty. Required Make the journal entries necessary to record the above events on Niagara County's government-wide financial statements for 2020 and 2021.

Here is information on the results of operations of a county government for the current year: Change in fund balances, governmental funds \ 2,000,000 Accrued pension expenses of governmental funds 100,000 Payments of principal on general long-term debt 1,500,000 Proceeds from issuing general long-term debt 6,000,000 Outlays for general capital assets 4,000,000 Depreciation expense on general capital assets 500,000 Net loss on disposal of general capital assets 60,000 Proceeds from the sale of general capital assets 200,000 The change in net position of governmental activities, reported on the government-wide statement of activities, is:

The following information is available concerning the financial activities of Livingston County for 2020: Change in total fund balances-governmental funds \ 360,000 Gain on sale of internal service capital assets 25,000 Depreciation expense on general capital assets 65,000 Capital outlays-governmental funds 200,000 Capital outlays-internal service funds 30,000 Capital outlays-enterprise funds 8,000 Change in net position-fiduciary funds 25,000 Change in net position-internal service funds 1,000 Loss on sale of enterprise fund capital assets 3,000 Gain on sale of general capital assets 500 Repayments of principal on general long-term debt 45,000 Proceeds from issuance of general long-term debt 338,000 Proceeds from sale of general capital assets 22,000 Other expenditures of governmental funds in excess of expenses, excluding depreciation 3,000 Expenses of internal service funds, other than depreciation, not requiring current financial resources 2,000 Required Prepare a schedule showing the reconciliation of the change in total fund balances-governmental funds (as reported on the statement of revenues, expenditures and changes in fund balances of the governmental funds) to the change in net position-governmental activities (as reported on the government-wide statement of activities). Not all information above is used in this reconciliation.

Here are financial statements shown in a city's CAFR: Required For each of the following account titles related to the financial performance of the city, indicate, by statement number, on which of the above eight statements the account appears. The account may be reported on one statement or more than one statement. -Fund statement: Statement of revenues, expenditures and changes in fund balances-Governmental funds

Here are some of the financial statements required in the CAFR for the State of Rhode Island: For each of the following accounts related to the financial performance of the State of Rhode Island, indicate on which of the above financial statements the account is reported. The account may appear on one statement, more than one statement, or none of the statements. Indicate the number(s) of the statement(s) next to each account title. If the item is not reported on any of the above statements, write N/A in the space. -Fund statement: Statement of revenues, expenditures and changes in fund balances-Governmental funds

Which item does not appear on the government-wide statement of activities?

Each of the following transactions relates to the activities of a county for the current year. 1) General obligation bonds with a par value of $10 million are issued at par to finance the construction of administrative facilities. The facilities are constructed for a total cost of $9.9 million, and the remaining cash of $100,000 is transferred to the debt service fund for future payment of bond principal and interest. 2) Equipment is sold by the general fund for $500,000. If the equipment had been reported using full accrual accounting, its book value at the time of sale would have been $450,000. 3) The county water and sewer unit issues $10 million in bonds at par, to finance its operations. The bonds will be paid from water and sewer revenues collected from county residents, and the water and sewer unit is reported in an enterprise fund. 4) Depreciation on water and sewer plant and equipment is $800,000. 5) A special revenue fund purchases equipment for $1 million. 6) Principal payments of $200,000 and interest payments of $300,000 are made on general obligation bonds used to finance general operations. Interest and principal payments are reported in a debt service fund. Required a. For each of the above transactions, prepare the journal entries necessary to record the transactions in (1) the fund financial statements, and (2) the government-wide financial statements for the county. For the government-wide entries, indicate whether the item is reported in governmental or business-type activities. For the fund entries, indicate which fund is affected. b. For each transaction item, indicate whether it is added, subtracted, or is not included in the reconciliation of the change in fund balances of governmental funds to the change in net position of governmental activities, appearing on the government-wide statements, and the amount of the reconciliation item, if included.

A county has the following governmental and business-type activity categories: Governmental activities: General government Public safety Economic development Environmental protection Education Transportation Interest on long-term debt Business-type activities: Water and sewer The following information was obtained from the financial records of the county for the year ended June 30, 2021 (in thousands): July 1, 2020 net position-governmental activities \ 69 July 1, 2020 net position-business-type activities 62,290 Expenses: General government 11,200 Public safety 27,200 Economic development 21,100 Environmental protection 8,900 Education 27,300 Transportation 690 Interest on long-term debt 4,230 Water and sewer 11,800 Grants and contracts received: Public safety 230 Economic development 5,360 Environmental protection 170 Education 2,345 Charges for services: General government 1,600 Public safety 4,700 Economic development 3,500 Environmental protection 2,050 Water and sewer 12,050 Property tax revenue 59,000 Sales and occupancy tax revenue 25,700 Other tax revenue 5,600 Unrestricted investment income-governmental activities 371 Unrestricted investment income-business-type activities 160 Required Prepare, in good form, the county's government-wide statement of activities for fiscal year 2021.

Portage County entered the following equipment lease agreements at the beginning of fiscal 2021: 1) The general fund signed a 3-year lease, with $200,000 paid at signing, and $200,000 due at the end of fiscal 2021 and fiscal 2022. 2) The water and sewer facility (enterprise fund) signed a 2-year lease, with $100,000 paid at signing, and $100,000 due at the end of fiscal 2021. Both leases have implicit interest rates of 3%, and the leased equipment has an estimated life equal to the life of the lease, no residual value. Round all dollar amounts to the nearest dollar. Required a. Prepare the journal entries to record lease activities in the general fund and the enterprise fund for fiscal 2021. b. Prepare the journal entries to record the lease activities in the government-wide statements for fiscal 2021. c. Identify the reconciliation items for fiscal 2022 (a year later) in 1) The reconciliation of fund balances of governmental funds to net position of governmental activities. 2) The reconciliation of changes in fund balances of governmental funds to change in net position of governmental activities.

Use the following information to answer Questions bellow: On April 1, 2020, Summit County issued $10,000,000 in variable rate debt, with interest paid on March 31 of each year, the county's fiscal year-end. The variable rate is adjusted at the beginning of each year. The variable rate for fiscal 2021 was 2.9%. On the same date, the county entered a receive variable/pay fixed interest rate swap, where the county pays a 3.1% fixed rate to a counterparty. The swap qualifies for hedge accounting. At the end of fiscal 2021, the variable rate is reset to 3.2% and the swap has increased in value by $75,000. By the end of fiscal 2022, the variable rate is reset to 3.4%, and the swap has increased in value by $125,000. -At the beginning of fiscal 2022, the county decides the swap no longer qualifies for hedge accounting. The adjusting entry results in

Use the following information to answer bellow Questions. A county reports its defined benefit pensions for employees of governmental and proprietary funds on the government-wide financial statements. Here is information for fiscal 2021. •The total pension liability, measured at the end of fiscal 2021, is $100,000,000, while the total pension liability, measured at the end of fiscal 2020, is $85,000,000. •The net increase in deferred outflows related to pensions was $2,000,000, while deferred outflows released to pension expense were $300,000. •The net increase in deferred inflows related to pensions was $150,000, while deferred inflows released to pension expense were $20,000. •The county transferred $5,000,000 in cash to the pension trust fund. -Pension expense reported in the fiscal 2021 government-wide statement of activities is