Exam 11: State and Local Governments: Other Transactions

A state determines that one of its swaps, reported in its enterprise fund, is no longer effective as a hedge of interest rate risk, and therefore hedge accounting is no longer appropriate. The swap was reported as an asset of $2 million. What is one of the effects of reclassifying the swap on the proprietary funds financial statements?

At the beginning of the current year, the general fund enters a 3-year lease with these terms: $100,000 is due at signing, and payments of $100,000 per year are due at the end of each of the next two years. The lease agreement carries an interest rate of 3%. The present value of the lease payments is $291,347. At the start of the lease, the general fund:

A state government begins a project to build administrative facilities, funded by a bond issue. A capital projects fund is set up to account for the construction activities, and an encumbrance is appropriately recognized in the capital projects fund for the full amount of the construction contracts, which is $10 million. At the end of the first year, only $2 million has been billed by contractors and recorded as expenditures. At the beginning of the second year, what entry is necessary in the capital projects fund to recognize the remaining encumbrances of $8 million?

Use the following information to answer questions bellow. The trial balance of a county's debt service fund at the beginning of the year is provided bellow: Dr (Cr) Cash \ 15,000 Investments 12,000 Fund balance-committed Total \ 0 General obligation debt payments for the year are estimated to be $80,000 for interest and $30,000 for principal. The county budget requires that the general fund transfer $100,000 to the debt service fund during the year. Income on investments is budgeted at $900. The debt service fund uses budget accounts. Transactions for the year are as follows: •The general fund transfers $100,000 to the debt service fund. •The capital projects fund transfers a bond premium on newly issued bonds to the debt service fund, in the amount of $1,000. •The debt service fund invests $35,000 in securities and sells investments with a book value of $40,000 for $40,200. Interest income on securities held during the year is $375, received in cash. The fair value of investments held at year-end is $7,300. •The debt service fund makes the principal and interest payments as budgeted. -On its operating statement for the year, the debt service fund reports other financing sources of:

Use the following information to answer questions bellow. The trial balance of a county's debt service fund at the beginning of the year is provided bellow: Dr (Cr) Cash \ 15,000 Investments 12,000 Fund balance-committed Total \ 0 General obligation debt payments for the year are estimated to be $80,000 for interest and $30,000 for principal. The county budget requires that the general fund transfer $100,000 to the debt service fund during the year. Income on investments is budgeted at $900. The debt service fund uses budget accounts. Transactions for the year are as follows: •The general fund transfers $100,000 to the debt service fund. •The capital projects fund transfers a bond premium on newly issued bonds to the debt service fund, in the amount of $1,000. •The debt service fund invests $35,000 in securities and sells investments with a book value of $40,000 for $40,200. Interest income on securities held during the year is $375, received in cash. The fair value of investments held at year-end is $7,300. •The debt service fund makes the principal and interest payments as budgeted. -The balance for committed fund balance, reported in the debt service fund's year-end balance sheet, is:

Governments are required to return arbitrage profits to the federal government. What are arbitrage profits?

A state lottery is reported in an enterprise fund. Its statement of cash flows reports a reconciliation of:

A state lottery's operating statement is called:

A county operates a landfill, reported in an enterprise fund. For fiscal 2020, operating expenses are $18.9 million, of which $2.3 million is depreciation on landfill facilities and $16.5 million is paid in cash. At the start of fiscal 2020, the enterprise fund reports a liability for future closure and postclosure care of $20.7 million. At the end of fiscal 2020, the estimated current cost of future closure and postclosure care is $70 million, and the landfill is 40% filled. Required Prepare the journal entries to record the above information in the landfill enterprise fund.

$10,000,000 face amount of bonds payable were sold at par by a governmental unit, with the proceeds to be used for the construction of a new building. This building was completed at a total cost of $10,000,000. Required Prepare the journal entries necessary to record the above events, omitting budgetary and closing entries, assuming: a. The governmental unit is the general fund, and the debt will be serviced by general tax revenues. b. The governmental unit is an enterprise fund, and the debt will be serviced by user fees. Specify the funds for which your entries are made.