F8: Deferred Outflows & Inflows of Resources

Question 1

If not an asset or liability, then how do we account for?

Answer 1

As a deferred outflow/inflow

Question 2

Deferred outflow definition:

Answer 2

Consumption of net assets that is applicable to a future reporting period

Question 3

Deferred outflows have a ______ effect on net position

Answer 3

Positive

Question 4

Deferred outflows are reported where?

Answer 4

Following assets but before liabilities

Question 5

Deferred inflow definition:

Answer 5

An acquisition of net assets that is applicable to a future reporting period

Question 6

Deferred inflows have a ______ effect on net position

Answer 6

Negative

Question 7

Deferred inflows are reported where?

Answer 7

After liabilities but before equity

Question 8

Types of transactions that are classified as deferred outflows/inflows:

Answer 8

• Service concessions arrangements
• Derivatives instruments and hedge accounting
• Imposed nonexchange revenue transactions
• Refunding of debt
• Sales and intra-equity transfers of future revenues

Question 9

Definition of a service concession arrangement

Answer 9

Payments by an operator to a government for the right to operate and collect user fees from third parties
(example: toll road)

Question 10

SCA is a deferred inflow/outflow IF:

Answer 10

• An upfront payment took place
• Operator collects and is compensated by fees from 3rd parties
• Transferor has ability to modify/approve what services operator can provide
• Transferor is entitled to significant residual interest

Question 11

Government side (transferor) in a SCA

Answer 11

• Continues to show asset as capital asset
• Displays a liability for contractual obligations
• Upfront payments are shows as an asset at PV
• Deferred inflows recognized in a systematic manner

Question 12

Derivative instruments definition

Answer 12

Used by state and local governments to manage specific risks or to make investments

Question 13

Examples of commonly used derivative instruments

Answer 13

• Interest rate and commodity swaps
• Interest rate locks
• Options
• Swaptions
• Forward contracts
• Futures contracts

Question 14

Derivatives are reported at what?

Answer 14

-Reported at fair value

Question 15

Changes in value of derivatives used as investments are displayed where?

Answer 15

Within the investment revenue classification (in earnings)

Question 16

Changes in value of derivatives used for hedging activities are displayed where?

Answer 16

As either deferred outflows or inflows

Question 17

Effective versus Ineffective hedging derivatives:

Answer 17

If Effective = reported as if they were effective from inception
If Ineffective = evaluated as of the end of the prior reporting period

Question 18

Termination of hedge accounting occurs when:

Answer 18

• Hedging instruments are no longer effective
• Expected transactions are no longer probable
• Hedged transactions are executed

Question 19

Imposed nonexchange revenue transactions reported as a receivable before their formal levy (such as property taxes before fully levied) are reported as what?

Answer 19

Deferred inflows

Question 20

Changes in government’s pension liability are accounted for in one of two ways:

Answer 20

1- expensed

2- deferred inflows/outflows

Question 21

Changes in government’s pension liability are expensed if:

Answer 21

changes resulted from current service costs and interest

Question 22

Changes in government’s pension liability are deferred if:

Answer 22

Changes resulted from changes in actuarial assumptions