B5-M5 Proprietary Funds Flashcards
Municipal solid waste landfills (MSWLF) owners and operators are required to incur a variety of costs to provide for protection of the environment both during the period of landfill operations and during the postclosure period. What are these costs?
Similar to Asset retirement obligation
a. Cost of equipment expected to be installed and facilities expected to be constructed near or after the date that the MSWLF stops accepting solid waste and during the postclosure period. This equipment should be limited to items that, once installed or constructed, will be exclusively used for the MSWLF. This may include gas monitoring and collection systems.
b. Cost of final cover (capping) expected to be applied near or after the date that the MSWLF stops accepting solid waste.
The orientation of accounting and reporting for all proprietary funds of governmental units is:
Accounting and reporting for proprietary funds is similar to accounting and reporting for a business enterprise. Thus, the full accrual basis is used and the measurement focus is on net income and capital maintenance.
How does an internal service fund (proprietary Fund) account for funds received from the general fund to capitalize?
Non-reciprocal transfer would be reported in the internal service fund as a credit to “transfers.”
Dr. Cash
Cr. Interfund Transfer
Activities are required to be reported as an enterprise fund if they meet one of the following three criteria. What are the criteria?
Activities are required to be reported as an enterprise fund if they meet one of the following three criteria:
a. The activity is financed with debt that is secured solely by a pledge of the net revenue from fees and charges.
b. Laws and regulations require that the cost of providing services be recovered through fees.
c. The pricing policies of the activity establish fees and charges designed to recover its costs.
Common theme among the three above -
“The pricing policies of the activity establish fees and charges designed to recover its cost.”
What are “Shared revenues” and how should it be recorded in fund financial statements?
Shared revenues are revenues levied by one government but shared on a predetermined basis with another government. Shared revenues received by a proprietary fund should be recorded as “non-operating revenue” if received for operations or if received for either operations or capital expenditures at the discretion of the recipient governmental unit.
How should state appropriations to a state university choosing to report as engaged only in business-type activities be reported in its statement of revenues, expenses, and changes in net position
Receiving state appropriations represents a non-exchange transaction and will be treated as nonoperating revenues. Operating grants and subsidies represent non-exchange transactions that are not derived from operations. They are treated as nonoperating revenues.
