GOV-Special items Flashcards
On the GOV wide, how should the interest on the debt be reported?
Report the interest from the notes payable benefiting specific functions as a direct expense of those functions and report the remaining interest as a separate line as an indirect expense.
What is the criteria for making capitalization optional for donated art?
The donated painting in this situation meets the three conditions that make capitalization optional for government-wide reporting:
-it is to be held for public exhibition and not gain,
-it is to be protected and preserved
, -and a policy is in place requiring proceeds from any potential sale to be used to acquire other collection items.
However, you must recognize revenue and expense
How are impairments treated?
.In the government-wide statements, impairment is a revaluation of a capital asset that is reported as an expense in the statement of activities.
Depending on circumstances, an expense could be reported in the statement of activities as a program expense, special item, or extraordinary item. In this case, as the asset is used in a specific program for the Public Works department, and the determination appears to have already been made that it does not meet the criteria for treatment as a special item, the best choice is to report the expense as a program expense.
Several years ago, Old Town received a bequest with instructions to keep the principal invested and use the earnings for salaries for recreation department workers. Where would the city report the use of the earnings for fund and government-wide financial reporting?
The use of investment earnings is specified for a particular purpose, so the use would be reported in a special revenue fund for the fund-based statements. Both the permanent fund and the special revenue fund are governmental funds. As the use is specified for a particular program, recreation, rather than for optional governmental use, it would be displayed in the government-wide statement of activities as program revenues.
How are
I. charges for services provided by a specific program.
II. program-specific grants and contributions.
III. taxes levied for a specific purpose.
treated as revenue on GOV wide?
states that all revenues are general revenues unless they are required to be reported as program revenues. All taxes, even those levied for a specific purpose, are general revenues. Program revenues consist of charges for services and program-specific grants and contributions.
How are indirect expenses treated?
Governments choosing to allocate indirect expenses should report them in a column separate from the direct expenses to enhance comparability with other governments that do not allocate.
