A city which 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 $600,000 (of which 10% are estimated to be uncollectible)are levied in October 1999 to finance the activities of the fiscal year 2000.During 2000, cash collections related to property taxes levied in October 1999 were $500,000.In 2001 the following amounts related to the property taxes levied in October 1999 were collected: January $25,000; March, $5,000.For the fiscal year ended 12/31/00, what amount should be recognized as property tax revenues related to the 1999 levy on the fund financial statements?

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. For the fiscal year ended 12/31/00, $500,000 was collected during 2000, and an additional $25,000 was collected in January 2001, which is within the 60-day window. Therefore, $525,000 should be recognized as revenue.

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