Deck 5

Question 1

what is the government fund equation for its financial position? balance sheet format (not net position)

Answer 1

A+deffered outflows=L+deffered inflows+fund balance

Question 2

where are bond issuance costs recorded?

Answer 2

included in the discount or premium calculation

Question 3

what are the four SELF criteria for discrete vs blended presentation?

Answer 3

seperetly
elected government body
legally seperate
financially independent

if it does not meet the SELF test, it is dicreet not blended

Question 4

how are gains and losses reported in a finance lease?

Answer 4

difference between fair value and cost at inception=gain/loss
ignore payment made-that is how the lease is initially recorded

Question 5

what is included in governement-wide basic financial statements?

Answer 5

net position, activities, using accrual economic resource focus

Question 6

how is a discount of a note payable presented on the balance sheet?

Answer 6

Service expense 5
Discount on note 1
Note Payable 6

interest expense
disc. on NP

at the end of the year=note payable face-discount at interest rate

Question 7

under equity method, if the purchase price is more than fair value, how is it recorded in earnings of the parent?

Answer 7

if purchase price>fair value–>excess is goodwill

if book valueamortize over asset life and reduce investment account amount*%ownership/life=amount to reduce

Question 8

when is revenue recognized for a conditional pledge?

Answer 8

never! only recognize unconditional pledge revenue

Question 9

who are the primary users of financials?

Answer 9

external parties: lenders, creditors, investors

regulators are secondary users

Question 10

what are the four fiduciary funds?

Answer 10

custodial
investment
private purpose
pension &other employee benefit

Question 11

what are the two proprietary funds?

Answer 11

enterprise

internal service

Question 12

how is the bond carry value affected by a discount and premium

Answer 12

add discount to carry amount

subtract premium from carry amount

Question 13

stated rate is less than market rate

Answer 13

discount

interest expense will go up as time goes on and will be more than the bond holder pays

Question 14

how is bond interest payable calculated?

Answer 14

face value*stated rate. It does not change as payments are made

Question 15

how is bond interest expense recognized?

how is bond interest payable calculated?

Answer 15

issue date to the end of the period.

last payment date to end of period.

Question 16

what type of revenues would be part of ongoing operations for a NFP hospital? (patient service revenues)

Answer 16

room and board fees from patients and recovery room fees

Question 17

what is the measurement focus for governmental funds?

Answer 17

sources and uses of financial resources. Amortization would not be taken on bonds. the bond premium would be recorded in the fund that is receiving the proceeds

Question 18

why are gasoline taxes for road repairs part of special revenue funds?

Answer 18

these are revenues that are legally restricted expenditures for specific purposes

Question 19

how is a budget booked of a governmental unit?

Answer 19

estimated revenues x
approrpiations x
budgetary control x

Question 20

when does the modified accrual method accrue for interest?

Answer 20

only when it is legally due. not at interim dates.

Question 21

when a contribution has a specific donor-imposed restriction, how is it recorded?

Answer 21

if there is no variance power over resources, it is accounted for as a liability

Question 22

do governmental funds or enterprise funds prepare a statement of cash flows?

Answer 22

enterprise have cash flows, governmental funds do not.
so issuing bonds in debt service is not cash flow
utility cash flows go in enterprise fund which do cash flow

Question 23

under the indirect method, what is included in operating cash flows?

Answer 23

Net income
add back depreciation expense
add back goodwill impairment
add decreases in assets
subtract increases in assets
add increases in liabilities
subtract decreases in liabilities
dividends received are already included in net income so ignore
dividends paid are financing
increse in AFS security is in financing

Question 24

if given the estimated ending uncollectable balance, how is uncollectible accounts expense calculated after a year end adjustment?

Answer 24

calculate the AJE while adding the provision to the allowance account. Then take provision plus AJE to = uncollectable accounts expense.

Question 25

what are the three types of financing leases?

Answer 25

LESSOR
sales type-at least one ownes is met
operating-no ownes
direct-finance-present and collectability are one or none met

LESSEE
financing-at least one owners is met
operating-no ownes

Question 26

what is the difference between costs for land and land improvements?

Answer 26

land costs include title and recording fees, clearing of trees
interest to acquire land should be expensed. Interest is only capitalized when used in a discrete manufacturing activity.
a sewage system is a land improvement
architect fees goes to building

Question 27

what is the present value formula?

Answer 27

present value=futre amount*pv factor

Question 28

For a bond issued at a discount, how would the bond liability be calculated?

Answer 28

carry value included premium or discount value and issuance costs.

Question 29

how are preffered stock dividends treated under equity method?

Answer 29

use fair value, preffered stocks do not allow for significant influence

Question 30

in the acquisition what is included in the parents financials for assets acquired?

Answer 30

book value of sub plus 100% of fair value of sub assets and liabilities.