In 2014 the federal government was affected by the following transactions and events. For each, indicate the amount that it should recognize as an expense during 2014. Cite the FASAB principle upon which you rely.
1. The government ordered 10 military aircraft from a manufacturer at a cost of $40 million each. During the year it received 5 and paid for 2. Their expected useful life is 10 years.
2. In response to extraordinary floods, Congress appropriated $2.4 billion in disaster relief. Some of the aid was targeted for infrastructure repair. During the year, the government contracted with a construction firm to repair a bridge at an agreed-upon price of $1.2 million. The contractor completed a portion of the job, billing the government for $600,000.
3. As part of the same flood-relief program, the government authorized direct grants to individuals and businesses. During the year, it approved grants totaling $400 million, of which it actually paid $240 million. It expected to pay the balance in the following year.
4. To assist workers laid off as the result of a recently passed free-trade agreement, Congress approved an employee relief act. The act provides that eligible employees would receive direct payments of $500 per month for up to 12 months. The cost of the program over its lifetime is expected to be $380 million. During the year, 25,000 laid-off workers applied, and were certified as eligible for benefits. They were paid a total of $50 million.
5. During the year the employees of one government agency earned pension benefits having an actuarial present value of $30 million. The government made actual payments of $23 million to employees who had previously retired from that agency.

  • CreatedAugust 13, 2014
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