Exam 11: State and Local Governments: Other Transactions

On the proprietary funds statement of net position, how is the net position section categorized?

Use the following information to answer Questions Construction activities for Oneida County for 2020 are as follows: 1) A capital projects fund is established for the construction of a recreation center. The total project is estimated to cost $15,000,000, with funding to come from a $9,000,000 general obligation bond issue, a $4,000,000 federal grant, and a $2,000,000 transfer from the general fund. 2) The general fund transfers $2,000,000 to the capital projects fund. 3) $3,500,000 of the federal grant is received in cash. 4) The bond issue with a par value of $9,000,000 yields $9,002,000. The premium is transferred to the debt service fund to finance payment of bond principal and interest. 5) A contract for $14,800,000 is awarded to a contractor. 6) Invoices for $8,000,000 are received for work performed by the contractor. The town has a 5% retainage policy and pays the contractor $7,600,000 in cash. 7) The county's spending policy is to use restricted resources first. The county uses the GAAP budgetary basis for end-of-year encumbrances. -What is the end-of-2020 balance in fund balance-restricted for the capital projects fund?

Use the following information to answer Questions. A county installs utility lines to a remote part of the county, financing the project with $10,000,000 in 3.5% bonds. The bond principal will be repaid in ten equal installments over the next ten years. Affected residents will be assessed an equal amount per year over the next ten years to retire the bonds and pay interest on outstanding bonds. The county has no liability for the bonds, and records transactions related to assessment of the residents and payment of the bond principal and interest using a custodial fund. -What is the assessment for the second year?

The State of California reports an environmental resources special revenue fund whose funding comes from federal grants, contributions from private foundations, and taxes set aside by the state budget. Its year-end balance sheet reports total assets of $10,500,000, consisting of cash and short-term investments, and total liabilities of $1,500,000. Unspent taxes are $200,000, unspent federal grants are $8,850,000, and unspent contributions from private foundations are $100,000. The fund's balance sheet reports fund balances as follows:

A state government has 5% bonds that it issued a few years ago. The bonds were issued at par and are carried at $10 million. Because current interest rates are significantly lower, the state refunds these bonds by issuing new bonds at 2%. The 5% bonds require a call premium of $200,000, and the state issues new bonds at par, $10,200,000. Required a. The bonds are general obligation debt, used to fund the activities of the general fund. Prepare the journal entry or entries to record the issuance of the 2% bonds and refunding of the 5% bonds. b. The bonds are the obligation of an enterprise fund. Prepare the journal entry or entries to record the issuance of the 2% bonds and refunding of the 5% bonds.

A county builds a new road for residents in a previously undeveloped section of the county, financing the project with $15,000,000 in 2.5% bonds issued on July 1, 2019. The bond principal will be repaid in ten equal installments over the next ten years, on June 30 of each year, starting on June 30, 2020. Affected residents will be assessed over the next ten years to retire the bonds and pay interest on outstanding bonds. The county has no liability for the bonds, and records transactions related to assessment of the residents and payment of the bond principal and interest using an custodial fund. Assume uncollectible amounts are negligible. The county's year ends on June 30. Required Prepare the journal entries in the custodial fund to: a. Record the levy for fiscal 2020. b. Record collection of the fiscal 2020 assessment. c. Record payment of principal and interest for fiscal 2020. d. Record the levy for fiscal 2021.

Listed below is information reported by the State University of New York for the year ended March 31, 2017, as reported in an enterprise fund in the State of New York CAFR (in millions): Decrease in net position \ 537 Operating loss 5,036 Cash used for o perating activities 1,891 Increase in accrued operating liabilities 74 Increase in interest payable on capital loans 6 Operating depreciation and amo rtization 579 Net gains on sales of capital assets 87 Increase in accrued other po ts employment benefits 656 Operating losses and write-offs 1,526 Increase in interest and dividends receivable on investments 4 Increase in unearned operating revenues 71 Decrease in operating receivables and other assets 239 Decrease in fair value of equity investments 76 Required Prepare the required reconciliation schedule for the enterprise fund's statement of cash flows for fiscal 2017. Note: Not all items listed are used in this reconciliation.

In a state CAFR, which fund reports parents' contributions to state 529 plans, which encourage the accumulation of resources toward their children's future college tuition payments?

Use the following information to answer Questions. On April 1, 2020, an enterprise fund issued $2,000,000 in variable rate debt, with interest paid on March 31 of each year, the fiscal year-end. The rate is reset annually. The variable rate for fiscal 2021 is 3.5%. On the same date, the fund entered a receive variable/pay fixed interest rate swap, where the fund pays a 3.6% fixed rate to a counterparty. By the end of fiscal 2021, the variable rate fell to 3.3% and the swap declined in value by $8,000. The swap qualifies for hedge accounting, per SGAS 53. -At what amount does the enterprise fund report interest expense on its operating statement?

A county general fund provides temporary funding to its capital projects fund for a construction project. The capital projects fund will pay it back to the general fund within the same fiscal year. How will this transaction be recorded by the general fund and the capital projects fund? A) Increase in current receivables Increase in current payables B) Expenditure Revenue C) Other financing use Increase in current payables D) Other financing use Other financing source

On July 1, 2020, a county government leases equipment through June 30, 2022. The lease agreement calls for payments as follows: $500,000 due at the lease signing and $600,000 due on July 1, 2021. The lease agreement carries an interest rate of 3.5%. Straight-line depreciation over the life of the lease, with no residual value, is used if appropriate. The county's fiscal year ends June 30. Required Prepare the entries to record events related to this lease on July 1, 2020, June 30, 2021, July 1, 2021, and June 30, 2022, assuming that: a. The lease is reported in an enterprise fund. b. The lease is reported in the general fund.

Following are selected transactions of the Town of Seneca Falls during 2020: 1) A capital projects fund is established for the construction of a new addition to the courthouse. The cost of the project is budgeted at $25,000,000. Funding is to come from the following sources: general obligation bond issue, $15,000,000, grant from the federal government, $10,000,000, and temporary funding from the general fund, $1,000,000. 2) The general fund advances the agreed-upon $1,000,000 for the project. It expects repayment within 60 days of year-end. 3) The general obligation bond issue yields a total of $15,100,000. Per town requirements, the premium is transferred to the debt service fund for eventual payment of bond principal. 4) The federal government pays $6,000,000 on the grant, with the remainder expected within 60 days of year-end. 5) Bids are taken for the building, and a contract for $24,200,000 is awarded to the qualified low bidder. 6) Invoices of $18,600,000 are received, representing payments due for partial completion of the contract. The town pays $18,300,000 of the invoices. 7) The town makes $375,000 in interest and $200,000 in principal payments on the bonds. The general fund made a transfer of $575,000 to the debt service fund, as specified in the town budget, to finance these payments. Required Prepare the following financial statements: a. Capital projects fund statement of revenues, expenditures, and changes in fund balance for the year 2020, and balance sheet as of 2020 year-end. b. Debt service fund statement of revenues, expenditures, and changes in fund balance for the year 2020, and balance sheet as of 2020 year-end.

On December 31, 2020, the City of Lancaster received a gift of $25,000,000 to endow a new public library. Terms of the gift provide that the principal be held intact and invested in appropriate securities. The donor specifies that income is to be used for library acquisitions. The City uses a permanent fund to report this endowment. On January 2, 2021, the gift was invested in securities having an annual yield of 2.5 percent. Library acquisitions costing $500,000 were made during 2021; $20,000 of these acquisitions remains unpaid at year-end, December 31, 2021. The securities have a value of $25,030,000 at year-end. Required a. Prepare appropriate journal entries (including closing entries) for 2021. b. Present the fund financial statements for 2021.

A permanent fund reports endowment investments of $10 million, where donors specify that investment income be used for specific activities. Total unspent income on these investments at year-end is $45,000. On its balance sheet, the permanent fund reports the $45,000 in which category of fund balance?

Here is fiscal 2021 financial information for a city's data processing center, whose activities are reported in an internal service fund: Change in net position \ 750,000 Operating income 1,250,000 Depreciation expense 850,000 Increase in accounts receivable 100,000 Nonoperating gain on disposal of capital assets 15,000 Decrease in inventories 8,000 Increase in net pension liability 200,000 Increase in OPEB liability 300,000 Increase in accounts payable 40,000 Nonoperating investment income 62,000 Required Prepare the data processing center's required reconciliation to cash provided by operations, presented in its fiscal 2021 statement of cash flows, in good form.

Listed below are accounts of the New York State Lottery for the year ended March 31, 2017, as reported in the State's enterprise fund (in millions): Dr (Cr) Current assets \ 1,235 Long-term investments 1,336 Long-term prizes payable (1,203) Current liabilities (1,000) Long-term pension liabilities (10) Net position restricted for future prizes (184) Deferred outflows for pensions 9 Deferred inflowsfor pensions (1) Required Prepare a statement of net position, in good form, for the New York State Lottery, for the year ended March 31, 2017. Note: Net position restricted for future prizes is the only restricted net position account.

Listed below are the cash inflows and outflows of the State University of New York for the year ended March 31, 2017, as reported in an enterprise fund in the State of New York CAFR (in millions): Receipts from hospitals and clinics \ 2,034 Transfers from other funds and nonoperating grants 3,119 Receipts from tuition and fees 1,639 Payments for operating expenses 7,708 Purchases of capital assets 1,190 Receipts from government and private grants and contracts 1,304 Principal and interest payments on long-term leases 1,852 Proceeds from sales and maturities of investments 371 Proceeds from short-term loans 91 Repayments of short-term loans 97 Receipts from auxiliary enterprises and other 840 Interest and dividends on investments 41 Capital gifts and grants received 32 Proceeds from capital debt 1,950 Purchases of investments 398 Proceeds from sale of capital assets 99 Cash balance, April 1, 2016 1,673 Required Prepare a statement of cash flows, in good form, for the enterprise fund, for the year ended March 31, 2017.

On its proprietary funds statement of net position, a state reports deferred outflows of $6 million related to derivatives. Which of the following might explain this amount?

What is the only governmental fund that can report a positive unassigned fund balance?

A state's special revenue resources that are limited based on federal grant requirements are usually reported in which category of the special revenue fund's fund balance?