Question 1

Indicate the financial reporting rules for each of the following special-purpose entities (which category of special-purpose entity) and indicate the financial statements that would be required:
a. A township that assesses property for taxation, provides road maintenance and provides welfare assistance.
b. A fire protection district that engages in protection of property in unincorporated areas from fires.
c. An independent tollway authority, not the component unit of any other government.
d. An independent statewide pension plan.
e. A public college.

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Question 2

What are the criteria outlined in GASB Statement 39 for requiring public college foundations to be reported as discretely presented components in the college's financial reports?

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Question 3

Southern State University has chosen to report as a public university reporting as a special-purpose entity engaged only in business-type activities. Deferred Revenues were reported as of July 1, 2008 in the amount of $5,600,000. Record the following transactions related to revenue recognition for the year ended June 30, 2009. Include in the account titles the proper revenue classification (operating revenues, nonoperating revenues, etc.): 1. Deferred revenues related to unearned revenues for the summer session, which ended in August $ 2008 . $
2. During the fiscal year ended June 30,2009 , student tuition and fees were assessed in the amount of $ \$ 65,000,000 $. Of that amount, $ \$ 51,000,000 $ was collected in cash. Also, of that amount, $ \$ 6,000,000 $ pertained to that portion of the 2009 summer session that took place after June 30, $ 2009 . $
3. Student scholarships, for which no services were required, amounted to $ \$ 2,000,000 $. Students applied these scholarships to their tuition bills at the beginning of the fall and spring semesters.
4. Student scholarships and fellowships, for which services were required, such as graduate assistantships, amounted to $ \$ 2,750,000 $. These students also applied their scholarship and fellowship awards to their tuition bills at the beginning of each semester.
5. Auxiliary enterprise revenues amounted to $ \$ 5,100,000 $.
6. The state appropriation for operations amounted to $ \$ 45,000,000 $.
7. The state appropriation for capital outlay amounted to $ \$ 16,500,000 $.
8. Gifts for endowment purposes amounted to $ \$ 2,000,000 $. Gifts for unrestricted purposes amounted to $ \$ 3,000,000 $. Interest income, all unrestricted, amounted to $ \$ 600,000 $.

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Question 4

What is the difference between a component unit and a special purpose local government?

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Question 5

Northern State University had the following account balances for the year ended and as of June 30, 2009. Debits are not distinguished from credits, so assume all accounts have a "normal" balance.
 \(\begin{array} { | l | r | } 
\hline \text { Additions to permanent endowments } & 1,100,000 \
\hline \text { Auxiliary enterprise revenue } & 5,200,000 \
\hline \text { Capital grants and gifts } & 1,260,000 \
\hline \text { Depreciation expense } & 2,310,000 \
\hline \text { Employee Benefits } & 2,410,000 \
\hline \text { Federal grants and contracts revenue } & 1,350,000 \
\hline \text { Gifts } & 760,000 \
\hline \text { Interest on capital-related debt } & 1,200,000 \
\hline \text { Investment income } & 380,000 \
\hline \text { Net assets, beginning of year } & 22,400,000 \
\hline \text { Nonexempt wages } & 3,420,000 \
\hline \text { Other operating expenses } & 3,600,000 \
\hline \text { Salaries-exempt staff } & 4,100,000 \
\hline \text { Salaries-faculty } & 6,370,000 \
\hline \text { Scholarship tuition and fee contra revenue } & 900,000 \
\hline \text { Scholarships and fellowships expense } & 901,000 \
\hline \text { State and local grants and contracts revenue } & 710,000 \
\hline \text { State appropriation for operations } & 6,400,000 \
\hline \text { State appropriations for capital additions } & 1,340,000 \
\hline \text { Student tuition and fee revenue } & 8,500,000 \
\hline
\end{array}\) Required: Prepare, in good form, a Statement of Revenues, Expenses and Changes in Net Assets for Northern State University for the year ended June 30, 2009.

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Question 6

Western State University had the following account balances as of June 30, 2009. Debits are not distinguished from credits, so assume all accounts have a "normal" balance (i.e. cash is a debit and accounts payable a credit) \(\begin{array} { | l | r | } 
\hline \text { Accounts payable } & 420,000 \
\hline \text { Accounts receivable (net) } & 400,000 \
\hline \text { Capital assets, net of depreciation } & 7,000,000 \
\hline \text { Cash and cash equivalents } & 115,000 \
\hline \text { Cash and cash equivalents - restricted (noncurrent) } & 245,000 \
\hline \text { Deferred revenue-current } & 325,000 \
\hline \text { General obligation bonds payable - current portion (related to } & \
\hline \text { capital acquisition) } & 390,000 \
\hline \text { General obligation bonds payable (related to capital acquisition) } & 2,500,000 \
\hline \text { Inventories } & 710,000 \
\hline \text { Investments - Endowment } & 4,400,000 \
\hline \text { Investments Long-term } & 1,500,000 \
\hline \text { Investments Short-term -unrestricted } & 900,000 \
\hline \text { Net assets-restricted-expendable } & 1,300,000 \
\hline \text { Net assets-restricted-nonexpendable } & 4,400,000 \
\hline \text { Revenue bonds payable (related to capital acquisition) } & 2,000,000 \
\hline \text { Net Assts - Unrestricted } & ? ? ? ? ? ? ? ? ? \
\hline
\end{array}\) Required: Prepare, in good form, a Statement of Net Assets for Western State University as of June 30, 2009.

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Question 7

Answer the following related to accounting and financial reporting for public colleges and universities:
a. What choices exist for financial reporting by public colleges and universities, according to GASB Statement 35?
b. Indicate the contents required for a financial report for those public colleges and universities that choose to report as special-purpose entities engaged only in business-type activities.

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Quiz 9: Accounting for Special-Purpose Entities, Including Public Colleges and Universities

What are the criteria outlined in GASB Statement 39 for requiring public college foundations to be reported as discretely presented components in the college's financial reports?

What is the difference between a component unit and a special purpose local government?