Beruflich Dokumente
Kultur Dokumente
Recognizing Revenues in
Governmental Funds
Chapter Four
Chapter 4
Learning Objectives
Chapter 4
Governmental Funds
Measurement Focus: flow of current financial
governmental activities
Fund Statements
vs. Government-wide Statements
Chapter 4
Revenue Recognition
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GASB Suggestion:
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Granof & Khumawala - 6e
Chapter 4
FUND
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1) Non-exchange Transactions
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Chapter 4
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Derived tax
revenues
Imposed nonexchange
transactions
Governmentmandated nonexchange
transactions
Voluntary nonexchange
transactions
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Chapter 4
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Property Taxes
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tax levy
assessed valuation
Calculation:
Statutory or legislatively
* assessed valuation of taxable
approved tax rate property (either real property or
personal property)
Another calculation:
Revenues required
Estimated collectible proportion
The tax rate is the measure that is actually set by legislative action,
once the required size of the levy is determined.
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Dr.
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Recognition Standards
Revenue from these transactions should be recognized when
all eligibility requirements, including time requirements, have
been met.
Example: Mandatory drug and alcohol abuse prevention
program for the schools (The DARE program in public schools).
If the grant is a reimbursement grant, then recognize when
qualifying expenditures have been made by the recipient
organization.
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Recognition Standards
Revenue from these transactions should be recognized
when all eligibility requirements between two willing
parties, including time requirements, have been met.
Example: State reimbursement to schools for portion of
special education costs incurred.
Reimbursement grant when qualifying expenditures have
been made.
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Intergovernmental Revenue
May be either government-mandated non-exchange transaction or
voluntary non-exchange transaction
Pass-through grants
On-behalf payments
Restricted grant
Unrestricted grant
Contingent grant
Entitlements
Shared Revenues
Payment in lieu of taxes
Often the amount is known before the actual receipt of cash and thus may
be accrued under the modified accrual basis.
Example of journal entries can be found on pgs 151-153.
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On-Behalf Payments
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2) Exchange Transactions
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Characteristics of licenses:
o Exchange transactions: License fees which cover the cost of services
provided.
o Non-exchange transactions: License fees that bear little relation to the cost
of services provided and imposed mainly as a source of general revenues.
o License fees are generally non-refundable.
o Includes items such as vehicle licenses, business licenses, liquor licenses,
marriage licenses, animal licenses, building permits, zoning variances, etc.
Fees for licenses and permits, passenger facility charges, certain tap
fees and certain developer contributions should be considered
exchange rather than nonexchange transactions, even though the party
making the payment may receive less in value than it surrendered.
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Miscellaneous Revenues
Examples:
o Proceeds from the sale of government assets
o Investment income
In general accrue if the amount is known prior to the
receipt of cash; but usually accounted for when
collected in cash.
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Chapter 4
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But for non-profits, FASB required that all debt and equity securities
be stated at fair value.
Gains and losses on investments both realized and unrealized must
be recognized and reported in the statement of activities.
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Summary
Primary objectives of financial reporting:
o Interperiod equity and budgetary compliance.
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