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BASIS of accounting for various funds Governmental ProprietaryFiduciary GOVERNMENT- WIDE 1. General 2. SRF 3. CPF 4. DSF 5. PERMANENT "modified-accrual"

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Presentation on theme: "BASIS of accounting for various funds Governmental ProprietaryFiduciary GOVERNMENT- WIDE 1. General 2. SRF 3. CPF 4. DSF 5. PERMANENT "modified-accrual""— Presentation transcript:

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2 BASIS of accounting for various funds Governmental ProprietaryFiduciary GOVERNMENT- WIDE 1. General 2. SRF 3. CPF 4. DSF 5. PERMANENT "modified-accrual" 1. Enterprise 2. Internal Service "full-accrual" 1. Agency 2. Trust "full-accrual" New GAS 34 requirement (Chapter 14) Worksheets to convert GOVTL to GOV-Wide "full-accrual" requires non-funds: 1. GCA 2. GLTL which basically are full-accrual. Information from non-funds is used extensively in Govt-Wide Assets are capitalized in the GCA, and reported in Govt-Wide Liabilities are set-up in GLTL and reported in Govt-Wide

3 General Capital Assets Dr. Cr. Increase Decrease Cost of GCA acquired Cost of GCA disposed of

4 RECORDED AT:Historic Cost. ESTIMATE OF acc/dep ACCEPTABLE for GASB. 1.Calculate current REPLACEMENT COST. $160,000 (assume) 2.DEFLATE current cost using price indexes to acquisition year. Suppose prices have risen 60% in last 5 years since asset was purchased. $160,000/1.60 = $100K 3.If asset is a 10-year asset, then retroactive accumulated depreciation is: $100,000/10 = $10,000 per yr $10,000 x 5 yrs = $50,000 acc/dep

5 ESTIMATE OF COST ACCEPTABLE for GASB. 4.If the asset's value is estimated before closing entries in year 5 then this entry would catch things up: Asset $100,000 Net Assets-Invested in GCA.....$100,000 Net Assets-Invested in GCA….. $50,000 Accumulated Depreciation………$50,000 This is done in the GCA non-fund, and NOT the GL.

6 CLASSIFICATIONS LAND $ paid for land, and costs incidental to its acquisition, and expenditures to prepare land for its use. BUILDINGS/ IMPROVEMENTS $ paid for permanent structures used to house persons/ property AND fixtures that are permanently attached. INFRASTRUCTURE Long-lived improvements (other than buildings) that add value to land. (bridges, sidewalks, streets, dams, tunnels). MACHINERY/ EQUIPMENT Moveable machinery and equipment. CONSTRUCTION IN PROGRESS expenditures for construction work undertaken but incomplete at balance sheet date.

7 Are long-lived assets that normally are stationary in nature and normally can be preserved for significantly greater number of years than most capital assets. OLD RULES Did not require capitalization. NEW (GAS 34) RULES 1. Requires that SLGs capitalize MAJOR infrastructure NETWORKS (e.g., highways) and SUBSYSTEMS (e.g., interstate highways). Exemption:If infrastructure asset is obtained earlier than June 30, Smallest of SLG not required to do retro- active capitalization either. subsystem cost at least 5% of total GCA. network cost at least 10% of total GCA. OLD RULE: Did NOT have to capitalize. NEW RULES: DO have to capitalize major infrastructure.

8 Infrastructure assets (IA) that are part of a network/subsystem ARE NOT required to be depreciated provided (2) requirements are met: 1.Asset management program in place to oversee IA. 2.Documentation that IA are being preserved at/or above given condition level. If modified approach is used, expenditures made for IA are EXPENDED Additions/improvements to IA that increase capacity/efficiency (rather than just extend useful life) should be capitalized.

9 WORKS OF ART AND HISTORICAL TREASURES RULE:Capitalize at their historical cost or FMV at date of donation whether individual items or held as a collection. EXCEPTION: NOT required to capitalize (donated or purchased) if a collection is INEXHAUSTIBLE.

10 WORKS OF ART AND HISTORICAL TREASURES IF COLLECTIONS CAPITALIZED in GCA accounts: ASSETS…….$XX.XX DONATION REVENUE..$XX.XX IF COLLECTIONS NOT CAPITALIZED in GCA accounts: PROGRAM EXPENSE (NET ASSETS)……..…….$XX.XX DONATION REVENUE..$XX.XX

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12 GENERAL FUND Cash……….. $850 Other Financing Source-sale of equip…… $850 GENERAL CAPITAL ASSET NON-FUND Vending Machine……………… $5,000 (CR for cost) Accumulated Depreciation………. $2,500 (remove it) Net Assets…………………………. $2,500 (book removed) GAIN OR LOSS? Book vs Cash received $2,500 $850 LOSS……. $1,650 Suppose that a vending machine with a cost of $5,000 and accumulated depreciation of $2,500 is sold for $850.

13 Suppose instead that the vending machine with a cost of $5,000 and accumulated depreciation of $2,500 is traded in on a new vending machine costing $8,500. A trade-in allowance of $1,200 is given on the old vending machine. GENERAL FUND Cost of new $8,500 - $1,200 trade-in = $7,300 cash paid. EXPENDITURES-VENDING MACHINE……$7,300 CASH………………………………………….$7,300 GENERAL CAPITAL ASSETS NON-FUND OLD VENDING MACHINE… $5,000 ACCUM. DEP….. $2,500 NET ASSETS……. $2,500 To remove old asset from non-fund records NEW VENDING.. $8,500 NET ASSETS……$8,500 To record entry of new machine at FULL COST OUR TEXT IS SILENT ON GAINS/LOSSES WITH REPLACE- MENTS.

14 Suppose instead that the vending machine with a cost of $5,000 and accumulated depreciation of $2,500 is retired and sold for salvage value of $500. Costs to ship the vending machine to buyer were paid by seller and amounted to $150. GENERAL FUND EXPENDITURES (SHIPPING)…..$150 CASH…………………………….$150 To record shipping costs CASH……. $500 EXPENDITURES (SHIPPING)……………….. $150 OTHER FINANCING SOURCES-SALVAGE..$350 To record net proceeds from salvage GCA-NONFUND NET ASSETS………. $2,500 ACC/DEP………….. $2,500 VENDING MACHINE………$5,000 LOSS equals: BOOK.. $2,500 - SALV $2,000 + ship LOSS $2,150

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16 CostAcc/DepBOOK $1,500$500$1,000 $10,000$4,000 6, $11,500$4,500$7,000 * Suppose that the FMV of this equipment was $10,000. Transfer at lower of book vs fmv. PROPRIETARY FUND Accumulated Depreciation.. $4,500 Equipment…………………$11,500 Capital Contributions……. $7,000 NOT called "transfer". GCA-NONFUND EQUIP…. $11,500 ACC-DEP…………...$4,500 NET ASSETS……… $7,000 PROPRIETARY  GENERAL FUND

17 CostAcc/DepBOOK $1,500$500$1,000 $10,000$4,000 6, $11,500$4,500$7,000 * Suppose that the FMV of this equipment was $10,000. Transfer at lower of book or "use value" to proprietary fund. PROPRIETARY FUND Equipment……… $7,000 (assume use value > or = book) Capital Contrib… 7,000 NOT called "transfer". GCA-NONFUND ACC/DEP…. $4,500 NET ASSETS..7,000 EQUIP…….$11,500 GENERAL FUND  PROPRIETARY

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19 PURPOSE? Account for resources held in TRUST by the government for the benefit of the government (or its citizenry). REQUIREMENTS? Principal of the trust must be maintained intact. STATEMENTS?Same as other governmentals: 1) Balance Sheet, 2) Statement of Revenues, Expenditures and Changes in Fund Balance EXPENDABLE VS NONEXPENDABLE

20 GAS 42 (NEW) As a SIGNIFICANT, UNEXPECTED, DECLINE in the service utility of a capital asset.


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