Question 1

Capital assets leased through capital by the General Fund are reported in the government-wide Statement of Net Position

Accepted Answer

GASB standards require the lease to be reflected as a capital expenditure within a governmental fund. The general fund would record a to debit Expenditures - Capital Outlay for the present value of the payments and credit Cash assuming a down payment) and Other Financing Sources - Capital.

Question 2

At the inception of a lease, no entry is necessary to record capital lease agreements entered by the General Fund since neither the asset nor the lease obligation appear in the fund-basis statements.

Accepted Answer

GASB standards require the lease to be reflected as a capital expenditure within a governmental fund. The general fund would record a to debit Expenditures - Capital Outlay for the present value of the payments and credit Cash assuming a down payment) and Other Financing Sources - Capital.

Question 3

Assume a government makes a change of assumption that results in an increase in its estimate of the net pension liability. The resulting change in the net pension liability will be recorded as pension expense in the period of the change.

Accepted Answer

Changes in the estimate of the net pension liability are recognized immediately in the pension expense only to the extent they affect the current service cost and the interest on the pension liability. Other changes, such as plan amendments or changes in actuarial assumptions, are recognized in other comprehensive income and amortized over time into pension expense.

Question 4

So long as the reporting government is not primarily responsible for debt under a construction type special assessment, the special assessment may be reported in an Agency Fund.

Accepted Answer

If the government is liable, either primarily or secondarily, for the payment of special assessment debt in the event of default by the property owners, the transactions are handled if as if it were a government project. A capital projects fund should account for the proceeds of the debt and the construction expenditures.

Question 5

Governments with defined benefit pension plans will report a net pension liability in the government-wide Statement of Net Position if the amount the government anticipates paying to employees in the future is greater than the net fiduciary position of the pension trust fund.

Accepted Answer

The net pension liability is the amount that a government anticipates paying to current employees in the future in excess of the resources currently accumulated for that purpose. The government-wide Statement of Net Position reports the net pension liability for employees engaged in governmental and business-type activities. The General and other governmental funds do not recognize long-term obligations. Governmental funds should report a liability for pensions in the fund-basis statements only to the extent the liability is expected to be paid with current financial resources.

Question 6

Capital assets acquired through capital by the General Fund are reported in the General Fund Balance Sheet.

Accepted Answer

Under a capital lease, the present value of the rental and other minimum lease payments or the fair value of the leased property and the related liability are recorded in the government-wide statements and proprietary funds. Governmental funds, including the general fund, record an expenditure for the present value of the payments and proprietary funds record and capital asset and related liability when the lease is signed. Under an operating lease, the government does not record the leased asset or a liability for the rental payments. Instead, payments are recorded by the governmental funds as current expenditures.

Question 7

Under governmental accounting principles for capital and operating ; expenditures are recorded each period for the amount of the annual lease payment for all , but the expenditures are classified differently for capital and operating .

Accepted Answer

Under a capital lease, the present value of the rental and other minimum lease payments or the fair value of the leased property and the related liability are recorded in the government-wide statements and proprietary funds. Governmental funds record an expenditure for the present value of the payments and proprietary funds record and capital asset and related liability when the lease is signed. Under an operating lease, the government does not record the leased asset or a liability for the rental payments. Instead, payments are recorded by the governmental funds as current expenditures.

Question 8

Net pension liabilities are reported in statements prepared using the economic resource measurement focus and accrual basis of accounting.

Accepted Answer

Financial statements prepared using the economic resources measurement focus and accrual basis of accounting must report a liability equal to the net pension liability.

Question 9

If a reporting government is only secondarily responsible for debt under a construction type special assessment, the special assessment is reported in an Agency Fund.

Accepted Answer

If the government is liable, either primarily or secondarily, for the payment of special assessment debt in the event of default by the property owners, the transactions are handled if as if it were a government project. A capital projects fund should account for the proceeds of the debt and the construction expenditures.

Question 10

Pension expenditures for governmental type funds are equal to the amounts paid to the pension fund for current year service plus any accruals for amounts to be paid from current financial resources.

Accepted Answer

Pension expenditures for governmental type funds are equal to the amounts paid to the pension fund for current year service plus any accruals for amounts to be paid from current financial resources.

Question 11

must meet all four of the criteria to be classified as capital .

Accepted Answer

A noncancelable lease must meet any of the following four criteria to be classified as a capital lease; 1) The lease transfers ownership of the property to the lessee, 2) The lease contains a bargain purchase option, 3) The lease term is equal to or greater than 75% of the estimated economic life of the leased property, and 4) The present value of the minimum lease payments equals or exceeds 90% of the fair value of the leased property.

Question 12

Service type are typically accounted for in the General Fund.

Accepted Answer

Service-type , such as an assessment to downtown businesses for special garbage removal or police protection, would be accounted for in the appropriate fund, often the General or special revenue fund.

Question 13

Capital assets leased through operating by the General Fund are reported in the government-wide Statement of Net Position

Accepted Answer

Under an operating lease, the government does not record the leased asset or a liability for the rental payments. Instead, payments are recorded by the governmental funds as current expenditures.

Question 14

Governmental health care entities, public school systems, and museums are commonly accounted for as special-purpose governments.

Accepted Answer

Special-purpose governments are commonly limited to one, or perhaps a few, service programs such as government-operated hospitals, public school systems, fire protection district, or public colleges, park districts, tollway authorities and other not-for-profit entities such as museums.

Question 15

Governments should report the net pension liability in the governmental fund basis statements even if it is not expected to be paid from current financial resources.

Accepted Answer

The net pension liability is the amount that a government anticipates paying to current employees in the future in excess of the resources currently accumulated for that purpose. The government-wide Statement of Net Position reports the net pension liability for employees engaged in governmental and business-type activities. The General and other governmental funds do not recognize long-term obligations. Governmental funds should report a liability for pensions in the fund-basis statements only to the extent the liability is expected to be paid with current financial resources.

Question 16

When governments construct projects that are financed with special assessment debt guaranteed by the government, those projects would be accounted for in the General Fund or a capital projects fund.

Accepted Answer

If the government is liable, either primarily or secondarily, for the payment of special assessment debt in the event of default by the property owners, the transactions are handled if as if it were a government project. A capital projects fund should account for the proceeds of the debt and the construction expenditures.

Question 17

Assume a government makes a change of assumption that results in an increase in its estimate of the net pension liability. This will be recorded in the government-wide statements as an increase in the net pension liability and an increase in deferred outflows of resources.

Accepted Answer

When a government makes a change of assumption that results in an increase in its estimate of the net pension liability, this increase will be recorded as an increase in both the net pension liability and deferred outflows of resources in the government-wide statements. This is because the government has incurred obligations related to pension benefits that have not yet been paid and therefore represent a future use of resources (deferred outflows).

Question 18

A special assessment tax is a tax levy that is assessed against only those taxpayers who are deemed to benefit from the service or project paid for by the proceeds of the special assessment levy.

Accepted Answer

A special assessment is a tax levy that is assessed only against certain taxpayers - those taxpayers who are deemed to benefit from the service or project paid for by the proceeds of the special assessment.

Question 19

Special assessment taxes may be levied to finance construction projects or to provide current services.

Accepted Answer

may be either service types or construction types.

Question 20

Capital assets acquired through special assessment debt guaranteed by the government are reported in the government-wide statements.

Accepted Answer

The capitalized cost of the project will be recorded in the government-wide statement. The debt should be recorded in the government-wide statements and the special assessment tax levy and debt service expenditures should be recorded in a debt service fund.

Quiz 9: Advanced Topics for State and Local Governments

Capital assets leased through capital by the General Fund are reported in the government-wide Statement of Net Position

At the inception of a lease, no entry is necessary to record capital lease agreements entered by the General Fund since neither the asset nor the lease obligation appear in the fund-basis statements.

Assume a government makes a change of assumption that results in an increase in its estimate of the net pension liability. The resulting change in the net pension liability will be recorded as pension expense in the period of the change.

So long as the reporting government is not primarily responsible for debt under a construction type special assessment, the special assessment may be reported in an Agency Fund.

Governments with defined benefit pension plans will report a net pension liability in the government-wide Statement of Net Position if the amount the government anticipates paying to employees in the future is greater than the net fiduciary position of the pension trust fund.

Capital assets acquired through capital by the General Fund are reported in the General Fund Balance Sheet.

Under governmental accounting principles for capital and operating ; expenditures are recorded each period for the amount of the annual lease payment for all , but the expenditures are classified differently for capital and operating .

Net pension liabilities are reported in statements prepared using the economic resource measurement focus and accrual basis of accounting.

If a reporting government is only secondarily responsible for debt under a construction type special assessment, the special assessment is reported in an Agency Fund.

Pension expenditures for governmental type funds are equal to the amounts paid to the pension fund for current year service plus any accruals for amounts to be paid from current financial resources.

must meet all four of the criteria to be classified as capital .

Service type are typically accounted for in the General Fund.

Capital assets leased through operating by the General Fund are reported in the government-wide Statement of Net Position

Governmental health care entities, public school systems, and museums are commonly accounted for as special-purpose governments.

Governments should report the net pension liability in the governmental fund basis statements even if it is not expected to be paid from current financial resources.

When governments construct projects that are financed with special assessment debt guaranteed by the government, those projects would be accounted for in the General Fund or a capital projects fund.

Assume a government makes a change of assumption that results in an increase in its estimate of the net pension liability. This will be recorded in the government-wide statements as an increase in the net pension liability and an increase in deferred outflows of resources.

A special assessment tax is a tax levy that is assessed against only those taxpayers who are deemed to benefit from the service or project paid for by the proceeds of the special assessment levy.

Special assessment taxes may be levied to finance construction projects or to provide current services.

Capital assets acquired through special assessment debt guaranteed by the government are reported in the government-wide statements.