FAR 15 Flashcards
Proprietary funds use the same J/E as Commercial business’s - Full Accrual
What is the J/E for an internal service fund that sells two vehicles for $5,000. That had a cost of $6,000 and Carrying value of $4,000?
Dr Cash 5,000
Dr A/D 2,000
Cr Vehicles 6,000
Cr Gain 1,000
Which type of school public or private NFP recognized depreciation expense?
Private - Yes
Public - no
What portion of expenses are included in the Year 1 expenses for a Municipal Solid Waste Landfill (MSWLF) for the portion of money that will be disbursed at the end of the landfills useful life?
Cost of equipment to be installed to monitor methane gas buildup
Cost of final cover (capping) expected to be applied on the landfill near or after the MSWLF stops accepting solid waste
What is the J/E for an internal service fund rendering services to another governmental unit? Ex: Billed governmental unit $150,000 for data processing services.
Dr Due from Other Funds 150,000
Cr Operating Revenues Control 150,000
Are Cash flow statements required for Governmental utilities and Public benefit corporations?
Yes both fall under Proprietary funds
What is the equation for Accrued compensation balances?
Beg balance of Liability + Accrued compensation absence expense - Payments = Ending balance of liability
What affects an internal service funds net position? What would appear on the Balance Sheet?
Interfund transfers out
Depreciation expense on its fixed assets
Interfund transfers in
Balance Sheet: Due from other funds
How are shared revenues received recorded by a proprietary fund from another governmental unit?
Non-Operating Revenues
How is a non-reciprocal transfer (cash received from the general fund to the Internal service fund) credited?
Non-reciprocal transfer would be recorded as a $50,000 credit to transfers
How are operating grants and subsidies such as state appropriations treated and what do they represent?
represent non-exchange transactions since the revenue is not from the day to day operations
Reported in the statement of revenues, expenses and change in net position as Non-operating revenues.
What budget is a pass through grant recorded?
Fiduciary fund - Custodial Fund
The debt service transactions of a special assessment bond issue for which the government is NOT obligated in any manner should be reported in the:
Custodial fund
Governmental unit has no direct responsibility but simply acting as a custodian in a fiduciary capacity for a third party
No responsibility regarding debt service if payers default
What transaction would be classified as an expenditure of a governmental units GENERAL fund?
Routine employer contributions from the general fund to a pension TRUST fund
What are the F/S required for an Investment Trust fund?
Statement of Fiduciary Net Position (Balance Sheet)
Statement of change in net position (Income Statement)
What is the J/E for a State government Custodial fund that collects income taxes for the benefit of one of its cities on income tax collection of residents? What is the initial and subsequent J/E’s?
Initial Recording: Dr Cash
Cr Additions: Tax collections for other Governments
Subsequent Disbursement: Dr Deduction: Payment of tax collections to other Governments
Cr Cash
What activity is excluded when Gov’t fund statements are converted into Gov’t wide F/S?
Fiduciary funds - cannot be used to support Gov’t programs or other services
Held for a 3rd party
What is true about the statistical section of the Annual Comprehensive Financial report (ACFR) of a Gov’t unit is true?
What are the 3 sections?
The statistical section is not part of the basic F/S
Introductory section, basic F/S & supplementary information as mandated by GASB 34, and the statistical section
Does the ACFR require a statistical section? is the introductory and statistical section audited?
Yes its the 3rd requirement
No both section are not audited
Does the MD&A Introduce (precede) the basic F/S and provide analytical overview in a Gov’t F/S?
Yes, MD&A is part of the city’s required supplementary information BEFORE basic F/S.
What is the focus of Gov’t wide F/S designed to do when providing information regarding the statement of activities? Fiscal accountability is not a focus of Gov’t wide F/S. - short term view
Operational Accountability - demonstrates it has met its operating objectives and its ability to meet future obligations
economic view that reports on the L/T efficient and effective use of resources
What are the two acceptable methods when a City Gov’t is the primary reporting entity representing its component units in its combined F/S?
Either Discrete presentation or blended method
What is the measurement focus & basis of accounting for Gov’t wide F/S?
Economic resources & Accrual method - similar to commercial enterprises
What is included in the Intro section of a local Gov’t annual comprehensive financial report?
Letter of transmittal
What is a minimum requirement for the basic F/S of a Gov’t entity?
Fund Financials statements
What are the 2 F/S and 1 supplementary information by GASB 34 regarding the basic F/S that are reported?
Gov’t Wide F/S
Fund F/S
Notes to the F/S
What would classify a component unit to be reported in a blended manner?
Rule: When component unit is so intertwined with the primary Gov’t that it is in substance the same as the primary Gov’t.
One indication is that it fails to be a “legal entity” test.
Entities that are not legally separate entities are blended with the primary Gov’t.
What makes up a discrete component unit?
Always assume this unless stated otherwise
Legally separate entity
Not substantially the same at the reporting Gov’t and the reporting unit does not exclusively service or benefit the Gov’t entity itself
Where is NCI reported in a consolidation?
Recognized in the equity section of the Consolidated Balance Sheet
What is the correct accounting treatment when compensatory stock options expire because the employee did not exercise? What is the J/E?
Reclassify the APIC accounts to reflect the expired stock options
Dr APIC - Stock Options
Cr APIC - expired stock options
What are identifiable intangible assets in an acquisition that could lower goodwill? What are they measured at?
Update customer lists, active issued patents, un-patented technology - valued at Fair Value
More than can be allocated to Identifiable intangible assets the less that can go to goodwill
What would increase goodwill?
Technical expertise
How are Equity securities reported?
Unrealized G or L at Fair value through net income
What Future value or present value amount do you use when annuity payments are made at the beginning of the month? What is the equation for accumulating a million dollars in 4 periods?
Future amount of annuity in advance due
Four annual deposits = $1,000,000/ Future amount of annuity in advance due: 5.11
When a deferred Tax Asset is more likely than not to be realized in the future, what is the Journal Entry to write down the DTA?
Dr Interest Expense
Cr Deferred Tax Valuation allowance account
What is the formula for total Accretion Expense? What is the original J/E & what method of depreciation is used?
Total ARO expense = S/L Dep. + Accretion
Dr Asset Retirement Cost
Cr ARO
