General obligation bonds used to increase the capacity of a water treatment plant (part of a water utility enterprise fund),but for which the debt service (including repayment of principal)will be paid from general government revenues should be reported as a long-term liability in the water utility fund balance sheet.

Question

Quizplus · Accepted Answer

Since water utility revenues will not be used for debt service on these bonds, the liability must be reported in the governmental activities financial statements. However, the enterprise fund should report a contribution from the General Fund (assumed) in the amount of the bond proceeds used for the water treatment plant.

General Obligation Bonds Used to Increase the Capacity of a Water