Pursuant to law, a state agrees to reimburse a county 50 percent of the costs incurred by the county to maintain county roads, provided the county incurs no more than $800,000 in allowable costs. Allowable costs include accrued but unpaid salaries, but do not include encumbrances. For its calendar year 2019, the county's records show the following for its road maintenance program: cash disbursements - $780,000; accrued salaries payable -$15,000; encumbrances - $10,000. How much intergovernmental revenue should the county recognize in its government-wide financial statements?

Question

Quizplus · Accepted Answer

GAAP requires governments that receive intergovernmental grants to recognize receivables and revenues (net of uncollectible amounts) when all eligibility requirements, including time requirements, are met. In this "expenditure-driven" grant, the county recognizes receivables and revenues as they incur allowable costs-the point when they meet the eligibility requirements-up to the maximum amount specified in the contract. In this case, the allowable cost for the year are $795,000, which includes the cash disbursements of $780,000 and the accrued salaries payable of $15,000. The state agrees to reimburse half of the $795,000 or $397,500.

Pursuant to Law, a State Agrees to Reimburse a County