The City of Dickens has a fiscal year ending December 31, Year 5. The city council is viewed as the highest level of decision-making authority for the government. For each of the following, indicate whether the overall statement is true or false. Assume that each situation is independent of all others.a. On December 30, Year 5, the city spends $900,000 on a sidewalk project that is not a special assessment. On the Year 5 financial statements, a reconciliation is presented that starts with the total change in fund balances for the governmental funds and works down to end with the total change in net position for the governmental activities. As a result of this acquisition, this $900,000 must be subtracted as part of this reconciliation.b. All members of the board of directors for a nature museum are appointed by the city. This fact alone makes this nature museum a component unit of the city.c. The city appoints none of the governing board of a parks commission. This fact alone prohibits this parks commission from being a component unit of the city.d. The city has a school system with a separately elected governing board (elected by the public). This fact alone makes the school system a special purpose government with its own financial reporting to be made.e. The modified approach applies only to infrastructure assets.f. The modified approach has become widely used in state and local government accounting over the last few years.g. The city’s school system charges students a $10 per person fee each year. In the statement of activities, this fee should be shown as miscellaneous revenue directly under the general revenues. h. The city receives a work of art worth $100,000 as a gift and also spends $70,000 in cash to buy a second art work. Both art works will be exhibited publicly and properly protected and preserved. The city council passes a resolution that if either item is ever sold the proceeds will be used to buy replacement art works. Both of the art works are viewed as inexhaustible. The city has the option to report both of these pieces of art as expenses rather than as assets in the government-wide financial statements.i. Assume that the city issues 30-day revenue anticipation notes on December 30, Year 5, to finance the government until new taxes are collected. These notes are issued at their face value of $500,000. On the Year 5 financial statements, there is a reconciliation that starts with the total change in fund balances for the governmental funds and works down to end with the total change in the net position for the governmental activities. As a result of the bond issuance, this $500,000 must be subtracted as part of this reconciliation.
The City of Dickens has a fiscal year ending December 31, Year 5. The city council is viewed as the highest level of decision-making authority for the government. For each of the following, indicate whether the overall statement is true or false. Assume that each situation is independent of all others.
a. On December 30, Year 5, the city spends $900,000 on a sidewalk project that is not a special assessment. On the Year 5 financial statements, a reconciliation is presented that starts with the total change in fund balances for the governmental funds and works down to end with the total change in net position for the governmental activities. As a result of this acquisition, this $900,000 must be subtracted as part of this reconciliation.
b. All members of the board of directors for a nature museum are appointed by the city. This fact
alone makes this nature museum a component unit of the city.
c. The city appoints none of the governing board of a parks commission. This fact alone prohibits
this parks commission from being a component unit of the city.
d. The city has a school system with a separately elected governing board (elected by the public).
This fact alone makes the school system a special purpose government with its own financial reporting to be made.
e. The modified approach applies only to infrastructure assets.
f. The modified approach has become widely used in state and local government accounting over
the last few years.
g. The city’s school system charges students a $10 per person fee each year. In the statement of activities, this fee should be shown as miscellaneous revenue directly under the general revenues. h. The city receives a work of art worth $100,000 as a gift and also spends $70,000 in cash to
buy a second art work. Both art works will be exhibited publicly and properly protected and preserved. The city council passes a resolution that if either item is ever sold the proceeds will be used to buy replacement art works. Both of the art works are viewed as inexhaustible. The city has the option to report both of these pieces of art as expenses rather than as assets in the government-wide financial statements.
i. Assume that the city issues 30-day revenue anticipation notes on December 30, Year 5, to finance the government until new taxes are collected. These notes are issued at their face value of $500,000. On the Year 5 financial statements, there is a reconciliation that starts with the
total change in fund balances for the governmental funds and works down to end with the total change in the net position for the governmental activities. As a result of the bond issuance, this $500,000 must be subtracted as part of this reconciliation.
Indicate whether the overall statement is true or false:
a.
Answer:
False
Explanation:
The style of reporting over the fund financial statements is different from the government-wide financial statements. On the fund financial statements, the expenditure was debited and cash was credited resulting in a decrease of expenditure in the fund balance by $900,000
But, on the government-wide financial statements, capital assets were debited and cash was credited. due to this there is no change in the amount of net assets. Therefore, the process of reconciliation starts with a negative $900,000 and reaches 0. In order to reflect the amount of $900,000 should be added.
Hence, the given statement is False.
b.
Answer:
False
Explanation:
The followings requirements are exits.
The museum must be dependent on the city fiscally.
The city officials can impose on the board.
All financials burdens of the city are taken by the museum.
Therefore, from the given requirements, the given statement is False.
c.
Answer:
False
Explanation:
Though someone else was appointed on the board, the parks commission would be treated as component of unit. If it is fiscally dependent on the city and makes a potential financial burden or benefits.
Therefore, the given statement is False.
d.
Answer:
False
Explanation:
In order to make the activity dealt by the special purpose government the activity must be independent legally and fiscally.
Therefore, the given statement is False.
e.
Answer:
False
Explanation:
Modified approach can be used to avoid questions raised on the indefinite expansion of the life of infrastructure. This expansion can be made through the maintenance, recording of depreciation.
Therefore, the given statement is False.
f.
Answer:
False
Explanation:
Modified approach is extensively used for its significant record keeping and proper maintenance of records. In this approach, the cost would not be matched with the benefits made by those assets.
Therefore, the given statement is False.
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