A government operates a landfill. In the Landfill Enterprise Fund financial statements, which of the following would be reported as a restricted asset?

Question

Quizplus · Accepted Answer

Restricted assets in the context of a Landfill Enterprise Fund (or any enterprise fund) are resources that are subject to constraints that are either externally imposed by creditors (such as through debt covenants), grantors, contributors, or laws and regulations of other governments, or imposed by law through constitutional provisions or enabling legislation. Choice A represents cash received from the sale of bonds with a debt covenant requiring it to be spent on a specific project (building a new landfill runoff treatment plant), which fits the definition of a restricted asset. Choices B and C involve internal designations or decisions by management or funds received from the general fund without specified external restrictions, which do not qualify as restricted assets under the typical accounting standards for government enterprise funds.

A Government Operates a Landfill