The City of Smithfield levied property taxes in and for 2015 in the amount of $300 million. It is estimated that 1% will be uncollectible. During 2015,$280 million was collected,and $12 million was collected during the next 60 days. Smithfield recognizes the maximum possible property taxes in its governmental funds. The adjustment,when moving from the governmental funds changes in fund balances to the governmental activities change in Net Position would be:

Question

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The adjustment would be a $2 million increase because the governmental funds recognize the maximum possible property taxes, while the governmental activities recognize only the amount collected. The difference between the two is the estimated uncollectible amount, which is $2 million.

The City of Smithfield Levied Property Taxes in and for 2015