The City of Charlotte levied property taxes in 2009 in the amount of $10 million. It is estimated that 2% will be uncollectible. During 2009, $9,000,000 was collected and it is anticipated that $400,000 will be collected during the next 60 days. When moving from the changes in fund balances in the Statement of Revenues, Expenditures and Changes in Fund Balances to the changes in net assets in the Statement of Activities, what will be the adjustment?

Question

Quizplus · Accepted Answer

The adjustment needed to move from the changes in fund balances to the changes in net assets is to subtract any uncollected taxes from the revenue. Therefore, the adjustment would be $10,000,000 (original tax levy) - 2% uncollectible ($200,000) = $9,800,000 total revenue. Since $9,000,000 was collected in 2009 and another $400,000 is expected in the next 60 days, the total revenue recognized in 2009 for financial reporting purposes would be $9,400,000. This adjustment would result in an increase in net assets of $400,000 (from the original reported revenue of $9,000,000 to the adjusted revenue of $9,400,000).

The City of Charlotte Levied Property Taxes in 2009 in the Amount