A city that has a 12/31 fiscal year end has adopted a policy of recognizing the maximum amount of property tax revenue allowable under GAAP.Property taxes of $720,000 (of which 10 percent are estimated to be uncollectible)are levied in October 2013 to finance the activities of the fiscal year 2014.During 2014, cash collections related to property taxes levied in October 2013 were $600,000.In 2015 the following amounts related to the property taxes levied in October 2013 were collected: January $30,000; March, $6,000.For the fiscal year ended 12/31/14, what amount should be recognized as property tax revenues related to the 2013 levy on the governmental fund financial statements?
A)$720,000.
B)$648,000.
C)$630,000.
D)$600,000.

Question

Quizplus · Accepted Answer

Under GAAP, property tax revenue is recognized in the period for which the taxes are levied, provided they are collected within 60 days after the fiscal year-end. The city collected $600,000 in 2014 and $30,000 in January 2015, which is within the 60-day window. Therefore, $630,000 should be recognized as revenue.

A City That Has a 12/31 Fiscal Year End Has