A government reported an other financing source in the amount of $600,000 related to the sale of land in its governmental funds Statement of Revenues,Expenditures,and Changes in Fund Balances.The land had a cost of $150,000.The adjustment in the reconciliation when moving from the changes in fund balances in the Statement of Revenues,Expenditures,and Changes in Fund Balances to the change in net assets in the Statement of Activities would be:

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When moving from the governmental funds Statement of Revenues, Expenditures, and Changes in Fund Balances to the Statement of Activities, the adjustment is made for any items that are not revenues or expenses under Generally Accepted Accounting Principles (GAAP). The sale of the land is one such item, as it represents an other financing source to the governmental funds. When the land was sold, the governmental fund recognized a revenue of $600,000, which is correct under the modified accrual basis of accounting. However, under GAAP, only the gain on the sale (i.e., the amount by which the selling price exceeds the cost) should be recognized as revenue, with the remainder being treated as a transfer to the government's capital projects fund. In this case, the gain on the sale is $450,000 ($600,000 - $150,000), so the adjustment in the reconciliation would be a decrease of $150,000 ($600,000 - $450,000) to reflect the proper recognition of revenue under GAAP.

A Government Reported an Other Financing Source in the Amount