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Question: A city has only one activity, its


A city has only one activity, its school system. The school system is accounted for within the general fund. For convenience, assume that, at the start of 2020, the school system and the city have no assets. During the year, the city assesses property taxes of $400,000. Of this amount, it collects $320,000 during the year, collects $50,000 within a few weeks after the end of the year, and expects the remainder to be collected about six months later. The city makes the following payments during 2020: salary expense, $100,000; rent expense, $70,000; equipment (received on January 1 with a five-year life and no salvage value), $50,000; land, $30,000; and maintenance expense, $20,000.
In addition, on the last day of the year, the city purchases a $200,000 building by signing a long- term note payable. The building has a 20-year life and no salvage value, and the liability accrues interest at a 10 percent annual rate. The city also buys two computers on the last day of the year for $4,000 each. One will be paid for in 30 days and the other in 90 days. The computers should last four years and have no expected residual value. During the year, the school system charges students $3,000 for school fees and collects the entire amount. The city determines depreciation using the straight-line method.
a. Produce a statement of net position and a statement of activities for this city’s government-wide financial statements.
b. Produce a balance sheet and a statement of revenues, expenditures, and changes in fund balance for the fund financial statements. Assume that available is defined by the city as anything to be received within 60 days.


> A private not-for-profit entity sends a mailing to all of its current and former members regardless of whether they have ever donated money or not. The mailing has a total cost of $22,000. It asks for monetary contributions to help achieve the charity’s

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> Which of the following statements about the reporting of functional expenses is not true? a. A statement of functional expenses is now required of all private not-for-profit entities. b. Functional expenses are divided between program services and suppor

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> The FASB ASC Subtopic “Variable Interest Entities” affects thousands of business enterprises that now, as primary beneficiaries, consolidate entities that qualify as controlled VIEs. Retrieve a recent annual report of one or more of the following compani

> Reynolds County has three large trucks with a total net book value of $600,000 and remaining lives of six years with no expected residual value. County officials lease the trucks to the City of Webster on January 1, 2020, for six years. Based on a negoti

> Use the same information as in Problem 51, except that, by the end of Year 3, the landfill is 40 percent filled. The city now realizes that the total closure costs will be $3 million. Indicate whether each of the following independent statements is true

> Indicate whether each of the following statements is true or false, and include a brief explanation for your answer. a. A pension trust fund appears in the government-wide financial statements but not in the fund financial statements. b. Permanent funds

> Use the information in problem 44 to prepare the 2020 fund financial statements for (a) the govern- mental funds and (b) the proprietary funds. A statement of cash flows is not required. Assume the city defines “available” as within 60 days and that all

> The City of Pfeiffer starts the year of 2020 with the general fund and an enterprise fund. The general fund has two activities: education and parks/recreation. For convenience, assume that the general fund holds $123,000 cash and a new school building co

> The City of Bernard starts the year of 2020 with the following unrestricted amounts in its general fund: cash of $20,000 and investments of $70,000. In addition, it holds a small building bought on January 1, 2019, for general government purposes for $30

> The following information pertains to the City of Williamson for 2020, its first year of legal existence. For convenience, assume that all transactions are for the general fund, which has three separate functions: general government, public safety, and h

> The County of Maxnell decides to create a waste management department and offer its services to the public for a fee. As a result, county officials plan to account for this activity as an enterprise fund. Prepare journal entries for this operation for th

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> On January 1, 2020, a rich citizen of the Town of Ristoni donates a painting valued at $300,000 to be displayed to the public in a government building. Although this painting meets the three criteria to qualify as an artwork, town officials choose to rec

> AutoNav Company agrees to pay $20 million in cash to the four former owners of Easy-C, Inc., for all of its assets and liabilities. These four owners of Easy-C developed and patented a technology for real- time monitoring of traffic patterns on the natio

> The City of Lawrence opens a solid waste landfill in 2020 that is at 54 percent of capacity on December 31, 2020. City officials had initially anticipated closure costs of $2 million but later that year decided that closure costs would actually be $2.4 m

> On January 1, 2020, the City of Hastings creates a solid waste landfill that it expects to reach capacity gradually over the next 20 years. If the landfill were to be closed at the current time, closure costs would be approximately $1.2 million plus an a

> The City of Raylan has a rather large warehouse that it no longer needs. The city had previously used the warehouse to store supplies and equipment for the school system, police department, and other public service functions. It has a remaining expected

> The City of Leonard decides to lease school desks for its school system rather than buy them because the lessor will do all scheduled maintenance. On January 1, 2020, the school system leases 5,000 school desks for four years. After that, they will be re

> The City of Bacon is located in the County of Pork. The city has a school system that reports buildings at a net $3.6 million although they are actually worth $4.2 million. The county has a separate school system that reports buildings at a net $5.2 mill

> An employment agency for individuals with disabilities works closely with the City of Hanover. The employment agency is legally separate from the city but still depends on the city for financial support. This support creates a potential financial burden

> An accountant is trying to determine whether the school system of the City of Abraham is fiscally independent. Which of the following is not a requirement for the school system to be judged as fiscally independent? a. Holding property in its own name b.

> Which of the following is not necessary for a special-purpose local government to be viewed as a primary government for reporting purposes? a. It must have a separately elected governing body. b. It must have specifically defined geographic boundaries. c

> Which of the following is true about the management’s discussion and analysis (MD&A)? a. It is an optional addition to the comprehensive annual financial report, but GASB encourages its inclusion. b. It adds a verbal explanation for the numbers and trend

> Which of the following statements is true about use of the modified approach? a. It can be applied to all capital assets of a state or local government. b. It is used to adjust depreciation expense either up or down based on conditions for the period. c.

> On October 18, 2020, Armstrong Auto Corporation ("Armstrong") announced its plan to acquire 80 percent of the outstanding 500,000 shares of Bardeen Electric Corporation’s ("Bardeen") common stock in a business combination following regulatory app

> A city builds sidewalks throughout various neighborhoods at a cost of $2.1 million. Which of the following statements is not true? a. Because the sidewalks qualify as infrastructure, the asset is viewed in the same way as land so that no depreciation is

> Assume in problem 17 that the city reports the work as a capital asset. Which of the following is true? a. Depreciation is not recorded because the city has no cost. b. Depreciation is not required if the asset is viewed as inexhaustible. c. Depreciation

> In problem 17, which of the following statements is true about reporting a revenue in connection with this gift? a. A revenue will be reported. b. Revenue is reported but only if the asset is reported. c. If the asset is not capitalized, the city recogni

> Use the same information as in (8). What amount of deferred lease revenue will Reynolds report on its statement of net position as of December 31, 2020, assuming that the county recognizes revenue on a straight-line method? a. Zero b. $487,419 c. $500,00

> Use the same information as in (8). What amount of depreciation expense will Reynolds report in its government-wide financial statements for 2020? a. Zero b. $52,581 c. $100,000 d. $112,581

> Use the same information as in (8). What is the total amount of expenditures that Webster will report on its fund financial statements for the governmental funds for 2020? a. $112,581 b. $136,954 c. $600,000 d. $712,581

> During 2020, the City of Coyote received $10,000, which was recorded as a general revenue in the general fund. It was actually a program revenue earned by the city’s park program. a. What was the correct overall change for 2020 in the net position report

> In 2020, the City of Coyote receives a $320,000 cash grant from the state to reduce air pollution. Although a special revenue fund could have been set up, the money remains in the general fund. The cash was received immediately but will have to be return

> The City of Coyote mails property tax bills for 2021 to its citizens during August 2020. Payments could be made early to receive a discount. The levy becomes legally enforceable on February 15, 2021. All money the government receives must be spent during

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> A vice president for operations at Poncho Platforms asks for your help on a financial reporting issue concerning goodwill. Two years ago, the company suffered a goodwill impairment loss for its Chip Integration reporting unit. Since that time, however, t

> The City of Coyote records an art display within its general fund. The display generates revenues of $9,000 this year as well as expenditures of $45,000 ($15,000 in expenses and $30,000 to buy land for the display). The CPA firm determines that the city

> On December 30, 2020, the City of Coyote borrows $20,000 for the general fund on a 60-day note. In that fund, the city records Cash and Other Financing Sources. In the general information, this city reports a $30,000 overall increase in the fund balance

> During 2020, the City of Coyote contracts to build a bus stop for schoolchildren costing $10,000 as a special assessments project. The city collects $10,000 from directly affected citizens. The government has no obligation in connection with this project

> Inside the City of Patience, Fund A transfers $20,000 in cash to Fund B. For each of the following, indicate whether the statement is true or false and, if false, explain why. a. If Fund A is the general fund and Fund B is an enterprise fund, nothing is

> The following are transactions of the City of Grayson. Indicate how each of the following transactions affects the fund balance of the general fund, and its classifications, for fund financial statements. Then describe the effect each transaction has on

> On December 1, 2020, a state government awards a city government a grant of $1 million to be used specifically to provide hot lunches for all schoolchildren. No money is received until June 1, 2021. For each of the following, indicate whether the stateme

> Government officials of the City of Johnson expect to receive general fund revenues of $400,000 in 2020 but approve spending only $380,000. Later in the year, as they receive more information, they increase the revenue projection to $420,000. Officials a

> Use the transactions in problem (47) but prepare a statement of net position for the government- wide financial statements. Assume that the general fund held $180,000 in cash on the first day of the year and no other assets or liabilities. No amount of t

> The following transactions relate to the general fund of the city of Lost Angels for the year ending December 31, 2020. Prepare a statement of revenues, expenditures, and other changes in fund balance for the general fund for the period to be included in

> The fiscal year for the City of Havisham ends December 31, Year 5. If the city were to produce financial statements before any adjustments, the following figures would be included: ∙ Governmental activities: Assets = $800,000, Liabilities = $300,000, and

> In this project, you are to provide an analysis of alternative accounting methods for controlling interest investments and subsequent effects on consolidated reporting using Excel. Modeling in Excel helps you quickly assess the impact of alternative acco

> The following trial balance is taken from the General Fund of the City of Jennings for the year ending December 31, 2020. Prepare a condensed statement of revenues, expenditures, and other changes in fund balance. Also prepare a condensed balance sheet.

> Chesterfield County had the following transactions. Prepare the entries first for fund financial statements and then for government-wide financial statements. a. A budget is passed for all ongoing activities. Revenue is anticipated to be $834,000, with a

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> A local government has the following transactions during the current fiscal period. Prepare journal entries without dollar amounts, first for fund financial statements and then for government-wide financial statements. a. The budget for the police depart

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> The board of commissioners of the City of Hartmoore adopts a general fund budget for the year ending June 30, 2020. It includes revenues of $1,000,000, bond proceeds of $400,000, appropriations of $900,000, and operating transfers out of $300,000. If thi

> A city transfers cash of $20,000 from its general fund to an enterprise fund to pay for work done by the enterprise fund for the school system. What is reported on the city’s fund financial statements? a. No reporting is made. b. Other Financing Sources

> On January 1, 2020, Hi-Speed.com acquired 100 percent of the common stock of Wi-Free Co. for cash of $730,000. The consideration transferred was allocated among Wi-Free’s net assets as follows: At the acquisition date, the computer soft

> On February 1, 2020, when the spot rate was $1.00 per Swiss franc, Blue Bogey Company (BBC) fore- casted the purchase of component parts on May 1, 2020, at a price of 100,000 Swiss francs. On that date, BBC entered into a forward contract to purchase 100

> A city transfers cash of $20,000 from its general fund to an enterprise fund to pay for work per- formed by the enterprise fund for the school system. How does the city report this transfer on its government-wide financial statements? a. No reporting is

> A county transfers cash of $60,000 from its general fund to a debt service fund. What is reported on the county’s fund financial statements? a. No reporting is made. b. Other Financing Sources increase by $60,000. Other Financing Uses increase by $60,000

> Which of the following is an example of an interactivity transaction? a. A city transfers money from the general fund to a debt service fund. b. A city transfers money from a capital projects fund to the general fund. c. A city transfers money from a spe

> The partnership of Hendrick, Mitchum, and Redding has the following account balances: This partnership is being liquidated. Hendrick and Mitchum are each entitled to 40 percent of all profits and losses with the remaining 20 percent going to Redding. a.

> The Simpson, Hart, Bobb, and Reidel partnership has terminated operations and is undergoing liquidation. Sales commissions and other liquidation expenses are expected to total $19,000. The partnership’s balance sheet prior to the commen

> A partnership has the following account balances at the date of termination: Cash, $80,000; Noncash Assets, $660,000; Liabilities, $320,000; Bell, capital (50 percent of profits and losses), $200,000; Mann, capital (30 percent), $120,000; Scott, capital

> When a partnership is liquidated, how is the final distribution of partnership cash made to the partners? a. Equally b. According to the profit and loss ratio c. According to the final capital account balances d. According to the initial investment made

> Patrick has a capital balance of $120,000 in a local partnership, and Caitlin has a $90,000 balance. These two partners share profits and losses by a ratio of 60 percent to Patrick and 40 percent to Caitlin. Camille invests $60,000 in cash in the partner

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> A partnership has the following capital balances with partners’ profit and loss percentages indicated parenthetically: Anne is going to invest $125,000 into the business to acquire a 40 percent ownership interest. Goodwill is to be reco

> On January 1, 2020, Innovus, Inc., acquired 100 percent of the common stock of ChipTech Company for $670,000 in cash and other fair-value consideration. ChipTech’s fair value was allocated among its net assets as follows: The December 3

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> Kimble, Sykes, and Gerard open an accounting practice on January 1, 2019, in Chicago, Illinois, to be operated as a partnership. Kimble and Sykes will serve as the senior partners because of their years of experience. To establish the business, Kimble, S

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> In the early part of 2021, the partners of Hugh, Jacobs, and Thomas sought assistance from a local accountant. They had begun a new business in 2020 but had never used an accountant’s services. Hugh and Jacobs began the partnership by contributing $150,0

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> Smith Corporation has gone through bankruptcy and is ready to emerge as a reorganized entity on December 31, 2020. On this date, the company has the following assets (fair value is based on dis- counting the anticipated future cash flows): The company ha

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> Llungby AB spent 1,000,000 krone in 2020 on the development of a new product. The company determined that 25 percent of this amount was incurred after the criteria in IAS 36 for capitalization as an intangible asset had been met. The newly developed prod

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