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Exam 5: Accounting for Other Governmental Fund Types: Capital Projects, Debt Service, and Permanent

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Question 1

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A gift of $1,000,000 to a city,to be invested permanently,with the proceeds to be used to maintain the city war memorials should be accounted for in a special projects fund.

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Question 2

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Bond refunding is repurchasing bonds from bondholders using residual money left over after a capital project has been completed.

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Question 3

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Which of the following is a major source of funding for capital projects funds?

The City of Little River had the following transactions related to the construction of a new courthouse. (a)1/2/2015: 20 year 6% General Obligation Serial Bonds with a face value of $3,000,000 are issued at 101. Interest payments are made on Jan.1 and July 1 of each year. The premium was transferred into the Debt Service Fund. The General Fund will fully fund each payment as they become due. (b)3/1/2015: Land is purchased for a new park at a cost of $ 175,000. (c)3/1/2015: A contract is signed for landscaping and construction of various structures in the park in the amount of $ 2,600,000. (d)6/15/2015: $165,000 is transferred from the General Fund for the 7/1 payment due on the courthouse fund serial bonds. (e)7/1/2015: Interest ($90,000)and principal ($75,000)are paid on the courthouse fund serial bonds. (f)12/1/2015: Receive an invoice for progress completed to date on the courthouse construction project in the amount of $1,716,000. (g)12/27/2015: $87,750 is transferred from the General Fund for the 1/1/10 interest payment due on the courthouse fund serial bonds.Interest is accrued as of 12/31/2015,following the exception permitted by GASB. Required: Prepare a Statement of Revenues,Expenditures and Changes in Fund Balance for the Capital Projects and Debt Service Funds. Assume this is the first year for each fund (beginning fund balances are zero)and the City has no other long-term debt than that described above. Use separate columns for the two funds

Any governmental fund may have a positive Unassigned Fund Balance.

Use the following to answer the next five questions: On October 1, 2014, the City of Mizner issued $4,000,000 in 4%, general obligation bonds at 101 for the purpose of constructing an addition to City Hall. The premium was transferred to a debt service fund. A total of $3,975,000 was used to construct the addition, which was completed prior to June 30, 2015. The remaining funds were transferred to the debt service fund. The bonds were dated October 1, 2014, and paid interest on April 1 and October 1. The first of 20 annual principal payments of $200,000 is due October 1, 2015. The fiscal year for Mizner is July 1- June 30. -In addition to a $4,000,000 liability in the government-wide Statement of Net Position,how would the bond sale be reported?

Debt service funds use the same measurement focus and basis of accounting as:

Budgets are typically recorded for which of the following:

Unexpended intergovernmental grants and taxes dedicated to capital improvements in a capital projects fund are likely to be classified as Restricted Fund Balance

Use the following to answer the next six questions: During the fiscal year ended December 31, 2015, the City of Johnstown issued 6% general obligation serial bonds in the amount of $2,000,000 at 102 ($2,040,000) and used $1,980,000 of the proceeds to construct a fire station. The $40,000 premium was transferred to a debt service fund. The $20,000 left in the capital projects fund at the end of the project was later transferred to the debt service fund. The bonds were dated April 1, 2015 and paid interest on October 1 and April 1. The first of 10 equal annual principal payments was due on April 1, 2016. -The amount of capital outlay expenditures reported by the capital projects fund would be:

Grant proceeds received from the state for a capital project would be recorded in a capital projects fund of a city government as a (an) :

Cash provided by the General Fund for a capital project would be recorded in a capital projects fund as a (an) :

Major sources of funding for Capital Project Funds include the issuance of long term debt and grants from other governmental units.

Because capital project,debt service and permanent funds use modified accrual accounting,these funds would typically record budgets.

Funds whose earnings benefit individuals,private organizations,or other governments are reported in private-purpose trust funds.

If a trust is to be used for the benefit individuals,private organizations or other governments,the following fund(s) should be used:

Which of the following should be accounted for in a permanent fund?

Net assets represented by supplies and prepaid expenses are classified in governmental funds as Nonspendable Fund balance.

Budgets are typically recorded for capital projects,debt service,and permanent funds.

When governments construct projects that are financed with special assessment debt,to be paid back by affected property owners,those projects could be accounted for in capital projects funds.