BASIS of accounting for various funds
Governmental
1.
2.
3.
4.
5.
General
SRF
CPF
DSF
PERMANENT
"modified-accrual"
requires non-funds:
1. GCA
2. GLTL
which basically are
full-accrual.
Proprietary
1. Enterprise
2. Internal Service
Fiduciary
1. Agency
2. Trust
GOVERNMENTWIDE
New GAS 34
requirement
(Chapter 14)
Worksheets to
convert GOVTL
to GOV-Wide
"full-accrual"
"full-accrual"
"full-accrual"
Liabilities are set-up in GLTL and reported in Govt-Wide
Assets are capitalized in the GCA, and reported in Govt-Wide
Information from non-funds is used extensively in Govt-Wide
General Capital Assets
Cost of GCA
acquired
Dr.
Increase
Cost of GCA
disposed of
Cr.
Decrease
RECORDED AT:
Historic Cost.
ESTIMATE OF acc/dep ACCEPTABLE for GASB.
$160,000 (assume)
1.
Calculate current REPLACEMENT COST.
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
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
3.
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.
CLASSIFICATIONS
LAND
BUILDINGS/
IMPROVEMENTS
INFRASTRUCTURE
MACHINERY/
EQUIPMENT
CONSTRUCTION IN
PROGRESS
$ paid for land, and costs incidental to its acquisition,
and expenditures to prepare land for its use.
$ paid for permanent structures used to house persons/
property AND fixtures that are permanently attached.
Long-lived improvements (other than buildings) that
add value to land. (bridges, sidewalks, streets, dams,
tunnels).
Moveable machinery and equipment.
expenditures for construction work undertaken but incomplete
at balance sheet date.
Are long-lived assets that normally are stationary in nature and normally can be
OLD RULE:
Did NOT
have to
capitalize.
preserved
for significantly
greater
number
of years than most capital assets.
OLD RULES
NEW (GAS 34) RULES
DidNEW
not require
capitalization.
RULES:
DO have to capitalize major
1. Requires
infrastructure.
that SLGs capitalize
MAJOR infrastructure NETWORKS
(e.g., highways) and SUBSYSTEMS
(e.g., interstate highways).
Exemption:
subsystem cost at least 5% of total GCA.
network cost at least 10% of total GCA.
If infrastructure asset is
obtained earlier than June 30,
1980.
Smallest of SLG not required to do retroactive capitalization either.
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.
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.
WORKS OF ART AND HISTORICAL TREASURES
IF COLLECTIONS CAPITALIZED
IF COLLECTIONS NOT CAPITALIZED
in GCA accounts:
in GCA accounts:
ASSETS…….$XX.XX
DONATION REVENUE..$XX.XX
PROGRAM EXPENSE
(NET ASSETS)……..…….$XX.XX
DONATION REVENUE..$XX.XX
Suppose that a vending machine with a cost of $5,000
and accumulated depreciation of $2,500 is sold for $850.
GAIN OR LOSS?
GENERAL FUND
Cash……….. $850
Other Financing Source-sale of equip…… $850
GENERAL CAPITAL ASSET NON-FUND
Book $2,500
vs
Cash received $850
LOSS……. $1,650
Net Assets…………………………. $2,500 (book removed)
Accumulated Depreciation………. $2,500 (remove it)
Vending Machine……………… $5,000 (CR for cost)
OUR TEXT IS SILENT ON
GAINS/LOSSES WITH REPLACEMENTS.
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
NET ASSETS……. $2,500
ACCUM. DEP….. $2,500
OLD VENDING MACHINE… $5,000
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
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.. 500
-------------------$2,000
+ ship.. 150
---------------------LOSS $2,150
PROPRIETARY  GENERAL FUND
Cost
$1,500
$10,000
---------$11,500
Acc/Dep
$500
$4,000
-------$4,500
BOOK
$1,000
6,000
--------$7,000
* Suppose that the FMV of this equipment was $10,000.
PROPRIETARY FUND
Capital Contributions……. $7,000
Accumulated Depreciation.. $4,500
Equipment…………………$11,500
NOT called "transfer".
Transfer at lower of
book vs fmv.
GCA-NONFUND
EQUIP…. $11,500
ACC-DEP…………...$4,500
NET ASSETS……… $7,000
GENERAL FUND  PROPRIETARY
Cost
$1,500
$10,000
---------$11,500
Acc/Dep
$500
$4,000
-------$4,500
BOOK
$1,000
6,000
--------$7,000
* Suppose that the FMV of this equipment was $10,000.
PROPRIETARY FUND
Transfer at lower of
book or "use value"
GCA-NONFUND to proprietary fund.
Equipment……… $7,000 (assume use value > or = book)
ACC/DEP…. $4,500
Capital Contrib… 7,000
NET ASSETS..7,000
EQUIP…….$11,500
NOT called "transfer".
PURPOSE?
Account for resources held in TRUST by the government
for the benefit of the government (or its citizenry).
REQUIREMENTS?
STATEMENTS?
EXPENDABLE
Principal of the trust must be maintained
intact.
Same as other governmentals:
1) Balance Sheet, 2) Statement of Revenues,
Expenditures and Changes in Fund Balance
VS
NONEXPENDABLE
GAS 42 (NEW)
As a SIGNIFICANT, UNEXPECTED,
in the service utility of a capital asset.
DECLINE