Exam 6: Proprietary Funds

Norton County operated a landfill,and accounted for it as an enterprise fund.The closure and postclosure care costs are estimated to be $15,000,000.It is estimated that the capacity of the landfill is 5 million tons of waste and that waste will be accepted for 10 years.During 2014,250,000 tons of waste was accepted by the landfill.The charge for closure and postclosure care costs for 2014 would be:

This fund accounts for activities that produce goods or services to be provided to other departments or other governmental units.

When an activity is created to provide goods or services to provide assistance to other departments or other governmental units,it should be accounted for in the:

As of July 1,2013,the City of Saratoga Springs decided to purchase a privately operated swimming pool and to create a Swimming Pool (Enterprise)Fund.During the year,the following transactions occurred: (a)A permanent contribution of $ 800,000 was received from the General Fund. (b)$ 1,000,000 was borrowed with a Note Payable from a local bank at an interest rate of 6%. (c)Purchased for cash several items,the cost breakdown was: land,$300,000; building,$400,000,land improvement,$400,000; equipment,$200,000; supplies,$190,000. (d)Charges for services amounted to $600,000,all received in cash. (e)Cash expenses included: salaries,$200,000; utilities,$100,000; interest (paid on 6/30/2014),$60,000. (f)Supplies were consumed in the amount of $120,000. (g)Depreciation was recorded for: building,$20,000,land improvement,$40,000; equipment,$20,000. (h)The books were closed.Close all accounts to Net Assets. Required: 1.Record the above transactions in general journal form (on the books of the swimming pool fund).2.Prepare,in good form,a Statement of Revenues,Expenses,and Changes in Fund Net Assets for the City of Saratoga Springs Swimming Pool Fund for the Year Ended June 30,2014.3.Prepare,in good form,a Statement of Fund Net Assets for the City of Saratoga Springs Swimming Pool Fund as of June 30,2014.4.Prepare,in good form,a Statement of Cash Flows for the City of Saratoga Springs Swimming Pool Fund for the Year Ended June 30,2014.Assume all of the revenue bonds payable are for capital-related acquisitions and that the transfer was to establish working capital (i.e.a non-capital-related purpose).

Proprietary funds are required to have a Statement of Revenues,Expenses,and Change in Net Assets,a Statement of Net Assets,but not a Statement of Cash Flows.

Proprietary funds:

Enterprise funds use the economic resources measurement focus and accrual basis of accounting

Solid waste landfills are required to estimate the cost of closure which include:

GASB Cash Flow Statements requires four classifications of cash flows instead of the 3 required by FASB.

Which of the following statements is true regarding estimated closure costs for municipal solid waste landfills,assuming that it is operating as an enterprise fund?