In preparation for the annual meeting of Barker County, the finance committee was meeting to discuss the

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In preparation for the annual meeting of Barker County, the finance committee was meeting to discuss the financial reports that would be presented to the Board of Commissioners. The committee included a newly elected commissioner, Michelle Backin, who graduated about 15 years ago with a business degree from the local college. After a long discussion about why the presentation of the financial information was so different from what she had learned in her accounting principles course, the county treasurer, Jack Black, was wrapping up the meeting.
"Are there any final questions from anyone on the committee?" Jack asked. Michelle raised her hand. "I just have one more question. Since the county has the power to tax, shouldn't there be an intangible asset in the government-wide financial statements that reflects the value of that power? Isn't it similar to owning a patent or trademark that allows you to produce future revenue? And I know that patents and trademarks are intangible assets." Jack looks at you, and says "Why don't you answer this question for Michelle?"
Required
a. First, present to Michelle the requirements that need to be met for an intangible asset to be recorded in the county's financial statements. Your discussion should be in language that a person without significant accounting knowledge would understand.
b. Using those requirements, explain in detail whether the power to tax meets the definition of an intangible asset.
c. Is there a point in time when the power to tax creates an asset? Explain.
Intangible Assets
An intangible asset is a resource controlled by an entity without physical substance. Unlike other assets, an intangible asset has no physical existence and you cannot touch it.Types of Intangible Assets and ExamplesSome examples are patented...
Financial Statements
Financial statements are the standardized formats to present the financial information related to a business or an organization for its users. Financial statements contain the historical information as well as current period’s financial...
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Accounting for Governmental and Nonprofit Entities

ISBN: 978-0078025822

17th edition

Authors: Jacqueline Reck, Suzanne Lowensohn, Earl Wilson

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