Continuing Problem (Questions 1 through 6) textbook pages 509-510 – 2020 Town of Cary, NC CAFR is used for these questions found
at https://www.townofcary.org/home/showpublisheddocument?id=25355
Here are the questions from pages 509-510
1. Do the
notes to the financial statements indicate the component units and other
related entities that are included within the reporting entity? Do they
indicate any units that are not included? Do they explain why these units are
included or excluded?
2. How are
the component units presented in the government-wide financial statements?
3. How are
they presented in the fund statements?
4. Has the
government entered into any joint ventures? If so, how are they reported?
5. What schedules
or other information does the government report as “required supplementary
information” (RSI)?
6. Does the
report contain all of the statistical information presented in Table 11-3?
(Enter the answer to the question
in the blanks provided.)
1.
Do the notes to the financial statements
indicate the component units and other related entities that are included
within the reporting entity? Yes or No ___________________________________
Do they indicate any units that are not included? Yes or No ________________________________
Do they explain why these units are included or
excluded? Yes or No ________________________
2. How are the component units presented in the
government-wide financial statements? __________________________________________________________________________
3.
How are they presented in the fund statements? ___________________________________
___________________________________________________________________________
___________________________________________________________________________
4.
Has the government entered into
any joint ventures? Yes or No ______________________
If
so, how are they reported? _________________________________________________
_________________________________________________________________________
5. What schedules or other information does the
government report as “required supplementary information”? (RSI) ______________________________________________
__________________________________________________________________________
__________________________________________________________________________
__________________________________________________________________________
6. Does
the report contain all of the statistical information presented in Table 11-3
on textbook page 482? Yes or No _________________________________________________
EX. 16-4
Nonexchange, as opposed to exchange, revenues present the more
difficult issues of accounting recognition.
The federal government, through its various government
agencies, engaged in the following transactions involving revenues.
In the middle of its fiscal
year, it rented land to a tenant. It signed a one‐year lease requiring
monthly payments of $2,000. In the year in which the lease was signed, the
tenant occupied the land for six months but paid an entire year’s rent
(i.e., $24,000).
It signed two contracts to provide engineering services
to a foreign government; each contract was for $50 million. During the
year, the federal agency completed 100 percent of one contract and 60
percent of the other. It collected the entire $100 million in cash.
It assessed fines of $100,000
each on two firms for polluting waterways. One offender paid the fine; the
other notified the government that it would contest the fine in court.
It accepted from a private
foundation a pledge of $120,000 to fund an exhibit in a government museum.
During the year the foundation paid $40,000 of its pledge, promising to pay
the balance in the following year. The pledge does not constitute an
enforceable legal agreement.
As the result of an audit, it
assessed a company $250,000 in income taxes for a previous year, the
entire amount of which was certain to be collected. In their audit report,
the auditors estimated that audits of subsequent years would yield an
additional $150,000.
Prepare journal entries to record the transactions. For each
entry comment briefly on the amount of revenue recognized.
EX. 16-5
Low‐interest loans constitute a subsidy and hence an expense.
The Business Development Corporation (BDC), a federal agency
(fictitious), makes loans to high‐tech companies that satisfy specified
criteria. The loans are intended to encourage research and development and are
made at rates substantially below market.
The BDC made a loan of $100,000 to Interface Networks, Inc.
The interest rate was six percent, and the loan was payable over a three‐year
period in equal installments of $37,411. At the time of the loan, prevailing
Treasury interest rates for loans of comparable maturities were 10 percent.
What was the amount of the loan
subsidy?
How and when should the agency
recognize the value of the subsidy? Explain.
Prepare a journal entry to
record the loan and recognize the subsidy.
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