A city on the coast of Florida has incurred losses (including impairment of assets, clean-up costs, additional public safety costs, etc.) of $50 million owing to a recent hurricane. This was the third time in as many years in which the city was hit by major storms. Should the losses be classiﬁed as “extraordinary”?
Answer to relevant QuestionsWhen bonds are issued for capital projects, premiums are generally not accounted for as the mirror image of discounts. Why not?What is arbitrage? Why does the Internal Revenue Service place strict limits on the amount of arbitrage that a municipality can earn?Paciﬁc Independent School District issued $100 million of general obligation bonds to ﬁnance the construction of new schools. The bonds were issued at a premium of $0.6 million.1. Prepare the capital projects fund ...As stated in the previous problem, a government issued $8.5 million of special assessment bonds to ﬁnance a sewer-extension project. To service the debt, it assessed property owners $8.5 million. Their obligations are ...Do you think that capital projects funds should be limited to accounting for resources that are externally restricted? What about debt service funds?
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