Pursuant to law,a state agrees to reimburse a county 50 percent of the costs incurred by the county to maintain county roads,provided the county incurs no more than $800,000 in allowable costs.Allowable costs include accrued but unpaid salaries,but do not include encumbrances.For its calendar year 2012,the county's records show the following for its road maintenance program: cash disbursements - $780,000;accrued salaries payable -$15,000;encumbrances - $10,000.How much intergovernmental revenue should the county recognize in its government-wide financial statements?

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Quizplus · Accepted Answer

The county should recognize $397,500 in intergovernmental revenue. This is calculated by adding the cash disbursements ($780,000) and accrued salaries payable ($15,000), which totals $795,000 in allowable costs. Since encumbrances are not considered allowable costs, they are not included in the calculation. The state agrees to reimburse 50 percent of these costs, so the county should recognize 50% of $795,000, which equals $397,500.

Pursuant to Law,a State Agrees to Reimburse a County 50