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Copy #3 > FAR - GASB - Specific Items, Transactions, Events > Flashcards

FAR - GASB - Specific Items, Transactions, Events Flashcards

1
Q

Interfund Transaction Types

A
  • Quasi-external
  • Reimbursements
  • Transfers
  • Loans
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2
Q

Quasi-external transactions

A

Business-type transactions take place between funds

EX: Internal Service Fund & Enterprise Fund activities providing services for a fee to other units of a govt

Revenues, expenditures, and expenses recorded in funds affected

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3
Q

Reimbursements

A

Reimburse 1 fund for expenditures/expenses recorded that should have been recorded in another fund

Recorded as an expense/expenditure in fund, making reimbursement and as a REDUCTION in expense/expenditure (not revenue) in the fund that is reimbursed

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4
Q

Transfers

A

Nonreciprocal transfers between funds w/no repayment requirement

Kinds:

  • operating transfers - usually budgeted/recurring
  • residual equity transfers - typically to start/close fund
  • not required to distinguish between 2 kinds of transfers in financial reports
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5
Q

Loans

A

Amounts transmitted between funds that are expected to be repaid

  • record receivables/payables among funds

Terminology:

  • short term loans: “due to” OR “due from”
  • Long term loans: “advance from” OR “advance to” require a reserve from fund balance in govt fund types
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6
Q

Construction Projects

A

Accounting for construction projects for govt activities, involves several acct entries

At a minimum:

  • capital projects fund
  • debt service fund
  • govt activities (govt wide)
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7
Q

Infrastructure Assets

A

Highways, bridges, streets, sidewalks, sewerage, drainage, lighting (buildings are not capital assets)

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8
Q

Accounting for Infrastructure Assets

A
  • Cost Reported
  • Depreciation
  • Modified Approach
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9
Q

Modified Approach

A

Govt can elect NOT TO DEPRECIATE infrastructure if it PRESERVES INFRASTRUCTURE IN A CONDITION EQUAL TO OR ABOVE original condition

  • expenditures to preserve condition = expensed in period incurred as substitute for depreciation
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10
Q

Modified Approach Rule

2 requirements

A

1) Record-keeping

2) documentation of condition status

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11
Q

Modified Approach Rule

1) Record-Keeping

A

Up-to-date inventory of infrastructure assets

  • condition assessment
  • estimates of costs to maintain/preserve infrastructure in its condition level
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12
Q

Modified Approach Rule

2) Documentation of Condition Status

A
  • Complete condition assessments made @ least every 3 years

- 3 most recent assessment provide evidence that condition is being preserved

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13
Q

Breaking Modified Approach Rule

A

If govt fails to maintain infrastructure in its condition level it must:

  • revert to reporting depreciation on infrastructure
  • discontinue use of modified approach
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14
Q

bonds payable used to finance major construction projects reported?

A

Reported as a liability in the government-wide financial statements and as a other financing sources - bond proceeds in the capital projects fund.

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15
Q

account name for short-term interfund receivables?

A

Due From XXXX

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16
Q

account name for long-term interfund receivables?

A

Advances to XXXX

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17
Q

payments made to contractors of a major construction project reported?

A

Reported as an increase to long-term assets in government-wide financial statements and as an expenditure in the capital projects fund.

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18
Q

principal component of debt service payments on bonds payable reported?

A

Reported as a decrease in Bonds Payable in government-wide financial statements and as an expenditure in the debt service fund.

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19
Q

A reciprocal transaction

A

occurs from doing business with one another, such as the billing of services by an internal service fund to other funds/departments in the

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20
Q

True/False

Interfund Reimbursements are Nonreciprocal Transactions in which a government determines that an expenditure or expense was initially recorded in one fund and should be accounted for and reported as an expenditure or expense in another fund.

A

True

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21
Q

True/False

government that elects to use the modified approach in accounting for infrastructure (e.g., sewer systems, roads, lighting systems) will report expenses necessary to maintain the condition of infrastructure and will not depreciate infrastructure assets

A

True

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22
Q

True/False

government that elects to use the modified approach in accounting for infrastructure (e.g., sewer systems, roads, lighting systems) will report expenses necessary to maintain the condition of infrastructure and will not depreciate infrastructure assets

A

True

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23
Q

True/False

government-wide financial statements are used to account for all unmatured long-term indebtedness of the government, except for that debt belonging to Proprietary and similar Trust Fund

A

True

24
Q

True/False

Capital Projects Fund is used to account for financial resources to be used for the construction or acquisition of capital assets, except for those to be financed by Proprietary Funds or Trust funds. The proceeds from the issuance of the bonds should be recorded in a Capital Projects Fund, but the liability for the bonds should not be recorded in a Capital Projects Fund

A

True

25
Q

Other types of long-term debt other than bonded dent

A
  • claims/judgments (contingencies)
  • compensated absences
  • pensions
  • other post-employment benefits (OPEB)
  • municipal landfill
  • leases
26
Q

Gov’t long term liab General Rule

A

Fund Level:

  • recognize expenditures AND fund liabilities to extent that amounts are payable with EXPENDABLE AVAILABLE FINANCIAL RESOURCES

Gov’t Activities & Proprietary Fund Level:

  • report full liability AND associated EXPENSE ACCORDING TO ACCRUAL ACCT
27
Q

Claims & Judgments

A

Accrue if:

1) Probable asset has been impaired or liab has been incurred AND
2) loss reasonably estimable

when both criteria met, apply general rule:

Report full liab & associated expense in gov’t activities

EX: personal injury, property damage, worker compensation, improper arrest

28
Q

Compensated Absences

A

Accrue vacation/sick leave when both conditions met:

1) employee’s right to receive compensation for future absences attributable to services rendered
2) probable that the employer will compensate employees for benefits through paid time off or other means such as lump-sum cash payments

29
Q

Pensions

A

Annual Required Contribution (ARC) = replaced Net Pension Liab

Only entry-age actuarial cost method of a percentage of payroll used

Biennial actuarial valuations also used (exception - small govts)

30
Q

Pension cost

A

Gov’t employer acct for pension cost depends on employing fund:

  • Gov’t Funds
  • Proprietary Funds
31
Q

Pension - Gov’t Funds

A

Net Pension Liab - amount expected to be liquidated with expendable available financial resources (benefit payments due and pension plan’s fiduciary net position is insufficient to pay those benefits)

Pensions Expenditure:

1) amounts paid to pension plan
2) change in beginning and ending net pension liab

32
Q

Pensions - Proprietary Funds

A

Net Pension Liab: total pension liab net of pension plan’s fiduciary net position

Pension Expense: changes in net pension liab

Contributions made to pension trust fund are NOT expense (reduction in fund net pension liab)

33
Q

Other Post-Employment Benefits (OPEB)

A

EX: healtchare, vision, dental, life insurance

Acct similar to pensions

34
Q

Capital Leases

A

Similar to for-profit acct

Capital lease:

1) transfer ownership to lessee @ end of lease
2) lease contains BPO
3) Lease term >/= 75% of asset’s life
4) PV of rents >/= 90% of asset’s FMV

35
Q

Capital Lease Acct

A

Gov’t-wide & Propreitary funds:

Lease Asset Value: Net PV of min. lease payments + initial cash payment

Gov’t Funds: No Capital Assets, recognize payments on lease as they occur

36
Q

Municipal Landfill

A

Proprietary Fund

  • Estimate total closure & postclosure costs
  • Allocate yearly using units of production method
37
Q

Expenditure Classifications

A

6 common classification schemes:

1) Fund
2) Program/function - broad purpose
3) Activity under program
4) Organizational Unit
5) Character - period of time
6) Object

38
Q

Character of Expenditure

A

Identifies expenditures based on period benefited

1) Current: current period
2) Capital outlay: benefit current/future periods
3) Debt service: payments on debt to acquire capital outlay items that benefit past, current, future periods
4) Intergovernmental - transfers of resources from 1 gov’t entity to another

39
Q

Object of Expenditure

A

groups expenditures according to type of item purchased/service obtained, classifications:

  • personal services
  • supplies
  • other services/charges
  • land
  • buildings
  • improvements
  • machinery/equipment
  • debt principal
  • interest
  • debt service charges
  • intergovt
40
Q

Revenue Classification

A

By sources:

  • taxes
  • licenses/permits
  • intergovt revenues
  • charges for services
  • fines/forfeits
  • miscellaneous revenues
41
Q

Identifying terminology

A

Gov’t Funds:

1) Expenditure
2) Fund Balance

Proprietary/Fiduciary:

1) Expenses
2) Net Position (not R/E or O/E)

42
Q

Nonexchange Transactions

A

1) Derived tax revenues
2) imposed tax revenues
3) Govt - mandated
4) voluntary

43
Q

Derived tax revenues

A

Taxes assessed on exchange transactions

EX: fuel, sales, cigarette tax

Recognition: when underlying exchange transaction occurs (fuel is purchased)

44
Q

Imposed tax revenues

A

tax assessed or other levy on nongovt entity for an act committed or omitted, act is NOT an exchange transaction

EX: property taxes, parking fines

Recognition: when legally enforceable claim = established (establish tax levy) and can be objectively measured

45
Q

Gov’t mandated

A

legislatively enabled grants mandates implementation of particular programs by recipient gov’t

EX: mandated environmental protection programs OR drugs/alcohol abuse programs

Recognition: when eligibility requirements are met and is both measurable and available

46
Q

Voluntary transactions

A

Legislative/contractual agreements between willing parties

EX: special education cost programs OR state distribution of resources to cities for street improvements

Recognition: when eligibility requirements are met and is BOTH measurable/available

47
Q

Grant Eligibility Requirements

A

Recipients specified by grant provider

1) Time requirements: time period in which grant must be used
2) Purpose requirements: specific program or purpose

Allowable costs (identifies what costs are allowed/costs not allowed)

“expenditure driven - usually grant monies are provided as reimbursement

48
Q

Deferred Item

A

grant in which a time requirement has NOT been met to be reported as a DEFERRED INFLOW OF RESOURCES on B/S

causes - failure to meet:

1) time restrictions OR
2) eligibility requirements

49
Q

Pollution Remediation

A

EX: asbestos contamination, hazardous spills, lead paint contamination, contaminated waterways, leaky underground storage tanks

Obligation are recognizable as liab when:

1) gov’t knows/reasonable believes that a site is polluted AND
2) obligating event occurs (5 types)

50
Q

Pollution Remediation Obligations

A

5 obligating events

1) pollution poses as imminent danger to public/environment
2) gov’t violates pollution prevention related permit or license
3) regulator identifies gov’t as responsible for cleaning up pollution
4) govt named in lawsuit to compel it to address pollution
5) govt commences or legally obligates itself to clean up activities

51
Q

Common types of intangibles

A
  • right-of-way easements
  • patents, copyrights, trademarks
  • land use rights
  • licenses/permits
  • computer software: purchased/licensed, internally generated
52
Q

Internally generated software

A

3 stages
1) preliminary project stage: conceptual stage (evaluate alternatives)

2) application development stage - design, code, install hardware, test
3) post-implementation/operation stage - train/maintenance

Classification based on nature of activity rather than timing of occurrence

53
Q

Recognition of Internally generated software

A

1) preliminary project - expense
2) application development - capitalize
3) post-implementation/operation - expense

54
Q

Software modification

A

Capitalized IF:

  • increases functionality, efficiency, or extends U/L

Otherwise -> expensed

55
Q

Land & Real Estate held as investments by endowments

A

land/other real estate held as investments by endowments reported @ FV @ reporting date

Changes in FV = investment income

56
Q

Reporting Requirements

A

Report FV of derivatives in statement on net position

Report change in FV each period:

1) Investment derivatives - as income in statement of revenues, expenses, and changes in net position
2) Hedging derivatives - as deferrals in statement of net position

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