FAR 24 Flashcards
What is budgetary accounting
budgetary accounting is based on forecasts and estimates and enables the planning, preparation and tracking of a balanced budget
in it expenditures equal estimated revenues and legal restrictions on use of funds are followed
What is the special accounting for artwork donated to the government
If they do not intend to sell them or if they do will buy replacement art
- the government MAY capitalize the asset - but don’t have to - may not choose to do that
- depreciation is not required
The statement of activities of government wide is designed primarily to provide info for what?
operational accountability information
What do notes to the financial statements consist of
they consists of notes that provide information that is considered essential to a user’s understanding of the basic financial statements
- it is acceptable to present notes in a very extensive format
- some notes presented can be identical to notes presented in business financial statements
- notes that are considered essential to the basic financial statement need to be presented
How does the fair value valuation work with regards to assets and depreciation
An asset is periodically evaluated
At the time of the evaluation the carrying value is adjusted to the new Fair Value (1.5M)
That amount is then depreciated between periods of valuation for equipment.
This is NOT the case with real estate held as investment property - it is held AT the fair value and is NOT depreciated. It remains at 1.5 is all subsequent years until it is revalued again
On January 1, year 1, Peabody Co. purchased an investment for $400,000 that represented 30% of Newman Corp.’s outstanding voting stock. For year 1, Newman reported net income of $60,000 and paid dividends of $20,000. At year end, the fair value of Peabody’s investment in Newman was $410,000. Peabody elected the fair value option for this investment. What amount should Peabody recognize in net income for year 1 attributable to the investment?
16,000
Under the fair value option, an entity may report financial instruments, including investments in the stock of another entity, at fair value provided consolidation is not required. With 30% ownership, Peabody’s investment in Newman would normally require the equity method, but Peabody may, and did, elect the fair value option. Peabody will recognize its $6,000 share of dividends ($20,000 x 30%) as dividend revenue, plus recognize the $10,000 gain in fair value at the balance sheet date, for a total of $16,000 in income recognized for the period
A city council designates funds in the enterprise fund for future equipment replacement. The enterprise fund should report this as
unrestricted component of net position
fund balances on the Governmental Funds balance sheet can be nonspendable, restricted, committed, assigned, and unassigned; they can be either a Restricted or Unrestricted component of a governmental entity’s Statement of Net Position. A restriction can only be imposed by constitution, external resource providers, or through legislation, not by designation by the city council. The funds would be unrestricted on the Statement of Net Position.
when you discount a notes receivable - what do you do about a contingent liability
you remain liable for the note if the maker of the note does not redeem it. Therefore you must disclose a contingent liability for the note on the balance sheet date
