Frustrated by high property tax rates, resident in the Village of Williamsville voted to dissolve their village government, instead agreeing to receive similar services (formerly provided by the Village government) from their county government, Erie County. No consideration must be paid by (or to) the county to effect this transfer. The effect of this transfer/dissolution will be that all village assets and liabilities (cash balances, buildings, infrastructure, and accounts payable) will become property and responsibilities of the county, six employees will transfer to the Eric County district offices, and three employees will be involuntarily terminated and given 3 months of severance pay. The three terminated employees were responsible for Williamsville’s animal control division, which will be discontinued.

Required: You have been asked to write a brief accounting issues memo to the Eric County government files describing the accounting implications of the Williamsville dissolution. In your memo, address the appropriate accounting for the transaction: merger, acquisition, or transfer of operation? Also, address how Erie County should recognize and measure the additional assets and liabilities, and describe - broadly - the accounting implications of the discontinuation of the animal control operations and the principle for recognition of the related employee terminations. In doing so, assume that Village of Williamsville has prepared financial statements as of the merger date. Feel free to identify other issues that should be considered, as well.

Answer rating: 100% (QA)

Memorandum To Erie County Government Officials From Your Name Your Position Date Date Subject Accounting Implications of Williamsville Dissolution As ... View the full answer