The balance sheet and statement of revenues, expenditures, and changes in fund balance for Boulder, Colorado’s Permanent Parks and Recreation Fund, a nonmajor capital project fund, for the fiscal year ending December 31, 2011, is shown in the right column (dates and amounts changed).
A note to the financial statements states the following:
Fund Deficits
The Permanent Parks and Recreation Fund has a fund balance deficit of $546,539. This deficit is the result of the Permanent Parks and Recreation Fund expenditures: one-half of the cost of a central irrigation system for city parks and the acquisition of Roper Fields for soccer fields. The cost of the central irrigation system was shared with the Water Utility Fund to improve water conservation. The Permanent Parks and Recreation Fund has funded these projects through interfund loans with December 31, 2011, balances of: Water Utility Fund ($52,870) and Flood Control Utility Fund ($1,274,524).
1. Suppose that you are the chief accountant of the Parks and Recreation Department. A member of the city council accuses you and your department of mismanagement as evidenced by the substantial fund deficit. How would you defend yourself? What is the significance of the fund deficit?
2. Prepare journal entries (as best you can with the information provided) in the Permanent Parks and Recreation Fund to record:
a. The acquisition of the central irrigation system and the Roper Fields (assuming that the cost of the assets is equal to the December 31, 2011, interfund loan balances even though the acquisition was, in fact, made prior to 2011 and a portion of the balances had already been repaid by December 31, 2011)
b. The interfund loans
3. A schedule of changes in general capital assets by function and activity indicates the following with respect to parks and recreation (in thousands):
General capital assets as of January 1, 2011 . $24,100
Additions, 2011 ............. 1,291
Deductions, 2011 ............. (373)
General capital assets as of December 31, 2011 . $25,018

How are the additions (which are other than the irrigation system and the soccer fields) and deductions most likely reflected in financial statements of the Permanent Parks and RecreationFund?

  • CreatedAugust 13, 2014
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