Question 1

As of January 1,2011,the Town of Bartonville notified the Barton County Investment Pool that it needed to withdraw $1,000,000 cash from the pool,so the manager sells investments on January 2 to obtain the required $1,000,000 cash.The investments sold had been carried in the Investment Trust Fund accounts at a fair value of $970,000.
Required
1)Show the entry for the sale of investments by the pool on January 2,2011.
2)Show the entry for the distribution of the gain on investments sold,assuming the Town of Bartonville's equitable share of the pool before the withdrawal of cash was 50 percent.
3)Show the entry for the Pool's payment of $1,000,000 to the Town of Bartonville.

Accepted Answer

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Question 2

"Because investment trust funds are intended to generate income on an ongoing basis to be used to support the purposes for which the trust was created,they should use modified accrual accounting." Discuss.

Accepted Answer

The answer of "Because investment trust funds are intended to...

Question 3

Grant City has held investments over a period of time for Grant Township in an investment pool,accounted for as an investment trust fund.The investments carried at fair value on July 1,2011 were $500,000 (cost totaled $460,000).On July 1,2011,the Grant School District received the proceeds of a general obligation bond sale at par in the amount of $9,500,000.It is expected that about 20 percent of this amount will need to be disbursed within the last six months of the current year,about 50 percent during the year after that,and the remainder in the third year of the project.The interest received on investment of the bond proceeds belongs to the Grant schools.This money was invested in the Grant Investment Pool.No other governmental entities have significant amounts of cash or investments as of July 1,2011.
Required
1)What percentage interest in the pool is held by the school district and the township? Explain your answers; show computations in good form.
2)Assuming that the cash received by the pool from Grant schools was invested promptly and that those investments were managed in the same manner as the township's investments in the pool,and that the earnings on pooled investments in the six months ended December 31,2011,were $300,000 (all received in cash; no accrued interest receivable):
(a)Show the entry in the Investment Trust Fund to summarize the collection of interest for the six-month period.
(b)Show the entry in the Investment Trust Fund to record the liability to the funds for interest earned on pooled investments.

Accepted Answer

The answer of Grant City has held investments over a...

Question 4

Explain the difference between an internal cash and investments pool and an external cash and investment pool and describe some of the differences in accounting treatment between the two.

Accepted Answer

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Question 5

Under current GASB standards,how are other postemployment retirement benefits (OPEB)reported?

Accepted Answer

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Question 6

In financial reporting for proprietary funds and at the government-wide level,the employer's pension expense for the period is equal to:

Accepted Answer

The employer's pension expense for the period is equal to the annual pension cost. The annual pension cost includes items such as the service cost, interest cost, and amortization of any changes to the plan's net pension liability. It is determined using actuarial calculations based on assumptions such as the expected rate of return on plan assets and employee demographic data. The employer's contribution and the annual required contribution may not necessarily be equal to the pension expense for the period. The change in net pension obligation is a measure of the change in the present value of future pension benefits and is not typically used to determine the pension expense for the period.

Question 7

Which of the following statements is true regarding termination benefits?

Accepted Answer

Voluntary termination benefits are provided to encourage employees to voluntarily terminate their employment, often in exchange for a one-time payout. In contrast, involuntary termination benefits are provided when employees are terminated due to reasons beyond their control, such as a layoff or reduction in workforce. Employers typically incur expenses related to both voluntary and involuntary terminations, although the specific costs may vary depending on the circumstances. There is no requirement to hire replacement employees within a certain timeframe to avoid expenses related to termination benefits.

Question 8

If a city has a fiduciary responsibility for assets entrusted to it,describe the factors that the city would consider in deciding whether to account for the assets in an agency fund or a trust fund.

Accepted Answer

The answer of If a city has a fiduciary responsibility...

Question 9

Explain the purpose of an investment trust fund and describe its accounting treatment.

Accepted Answer

The answer of Explain the purpose of an investment trust...

Question 10

Which of the following is the appropriate measurement focus for agency funds?

Accepted Answer

The appropriate measurement focus for agency funds is economic resources as agency funds are used to facilitate transactions between different entities, and therefore the focus is on recording the resources that are entrusted to the entity for the benefit of others. The economic resources measurement focus ensures that all resources entrusted to the agency are recorded, including investments, loans, and other non-cash resources.

Question 11

Describe the types of pension plans most often found in governmental entities and the differences between them.Do you expect that most governmental employers sponsor a "single-employer plan" or participate in a public employee retirement system (PERS)?

Accepted Answer

The answer of Describe the types of pension plans most...

Question 12

The following are key terms in Chapter 8 that relate to accounting for pension plans.
A.Actuarial accrued liability
B.Actuarial present value of total projected benefits
C.Actuarial value of assets
D.Annual required contributions
E.Net pension obligation
F.Normal cost
G.Unfunded actuarial liability
For each of the following definitions,indicate the key term from the list above that best matches by placing the appropriate letter in the blank space next to the definition

Accepted Answer

The answer of The following are key terms in Chapter...

Question 13

On July 1,2011,Kent County received the following securities to be held as the principal of a trust; the income from the securities is to be transferred to the Kent Heritage Museum,a private not-for-profit museum.  Required
1)In what type of fiduciary fund should the receipt of the bonds described above be recorded?
2)Show in general journal form the entry that should be made to record the receipt of the bonds.
3)On January 1,2012,interest received in cash amounted to $57,500 ($35,000 on Blue Company bonds and $22,500 on Red Company bonds).Assuming that income from the bonds is to be computed on the accrual basis,what is the amount of income for the period 7/1/11 - 12/31/11 that should be transferred to the Kent County Museum early in 2012? Show computations.

Accepted Answer

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Question 14

Explain the purpose of the account "undistributed change in fair value of investments" used in a cash and investment pool and describe how it should be reported in the government's financial statements.

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Question 15

Which of the following activities would be accounted for by a trust fund?

Accepted Answer

The answer of Which of the following activities would be...

Question 16

Ingham County collects,in addition to its own taxes,taxes for other units.Tax levied for 2011 were as follows:  Collections from the 2011 levies amounted to $3,550,000 and were distributed in proportion to the original levies,less a 1% collection fee charged Mason City and the Mason School District.Collection fees are remitted to the Ingham County General Fund.
Required
1)Record the tax levies in the Ingham County Tax Agency Fund.
2)Record the collection from the 2011 tax levies in the Ingham County Tax Agency Fund and the specific liabilities owed each fund and unit (Round all amounts to the nearest whole dollar.)
3)Record in the Ingham County Tax Agency Fund the transfer of collected taxes to each fund and unit.

Accepted Answer

The answer of Ingham County collects,in addition to its own...

Quiz 8: Accounting for Fiduciary Activities Agency and Trust Funds