Question

The City of Gargery has a fiscal year ending December 31, Year 5. If the city were to produce financial statements right now, the following figures would be included:
-- Governmental activities: Assets = $800,000, Liabilities = $300,000, and Change in Net Position for the period = increase of $100,000.
-- Business-type activities: Assets = $500,000, Liabilities = $200,000, and Change in Net Position for the period = increase of $60,000.
-- Governmental funds: Assets= $300,000, Liabilities= $100,000, and Change in Fund Balances= increase of $40,000.
-- Proprietary funds: Assets= $700,000, Liabilities= $300,000, and Change in Net Assets for the period = increase of $70,000.
Other information: The city council is viewed as the highest level of decision-making authority for the government. Where applicable, current financial resources are viewed by the government as available if collected within 75 days of the end of a fiscal year.
For each of the following, indicate whether the overall statement is true or false. Assume that each situation is independent of all others.
a. A cash amount of $19,000 is transferred from the general fund to an internal service fund to pay for work that was done by the print shop for the school system. On the statement of revenues, expenditures, and other changes in fund balances for the Governmental Funds (in the fund financial statements), this resource outflow is reported as another financing use.
b. Assume that after the provided figures were determined, city officials learned that $100,000 in property taxes had been assessed but not recorded on December 29, Year 5. Per legal requirements, these taxes were solely to finance government operations in Year 6. Starting on January 1, Year 6, the city will collect $1,000 per day for the next 98 days (the final $2,000 is expected to be uncollectible). The change in net position for the governmental activities in the government-wide statements reported for Year 5 should be increased by $98,000.
c. Assume that after the provided figures were determined, city officials learned that $100,000 in property taxes had been assessed but not recorded on December 29, Year 5. Per legal requirements, these taxes were solely to finance government operations in Year 6. Starting on January 1, Year 6, the city will collect $1,000 per day for the next 98 days (the final $2,000 is expected to be uncollectible). The change in fund balances for the Governmental Funds reported for Year 5 should be increased by $60,000.
d. Assume that after the provided figures were determined, city officials learned that $100,000 in property taxes had been assessed but not recorded on December 29, Year 5. As per legal requirements, these taxes were solely to finance government operations in Year 6. The government collected $5,000 on December 30, Year 5, but the rest will not be collected until June of Year 6. On fund financial statements for the Governmental Funds as of December 31, Year 5, the total liability balance will be increased by $5,000.
e. Investments with a value of $5 million are given to the city by a donor. All income earned from these investments must be used to construct a small library in one of the local neighborhoods but the investments must be held forever. In Year 5, income of $480,000 was received from these investments. However, none of this money has yet been spent. On fund financial statements, the year-end balance sheet for the Governmental Funds must show a “fund balance—restricted” of $5 million and a “fund balance—committed” of $480,000.
f. The State of Virginia requires the City of Gargery to buy equipment to monitor local air quality. The state awards the city $100,000 to help pay for the equipment. This grant is known as a voluntary nonexchange transaction so that this revenue is not recognized until all eligibility requirements are met.
g. The city constructs curbing for a neighborhood in a special assessment project in which the individuals whose property is benefiting from the curbs will pay for the work. The city has no legal responsibility for this work so it is recorded in an agency fund. The money collected should be reported as program revenues on the statement of activities in the government-wide financial statements.
h. On January 1, Year 5, the city is awarded a grant for $130,000 with this money to be used to supplement the salaries of the police and fire department workers. No money will be received by the city until after the salaries have been paid. On December 30, Year 5, all $130,000 is distributed to the appropriate workers and the city applies for reimbursement to receive the grant money. The money will be received within the next month. The $130,000 revenue is recognized in the government-wide financial statements in Year 5 but not in the fund financial statements for Year 5.



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  • CreatedJanuary 08, 2015
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