acc 410 ch4 homework
CH 4 Homework
Questions 6,7,8,9
6. Property taxes are recognized in the period that the taxes are levied. In the fund statements, the taxes must meet the additional criterion that they be available.
7. Sales tax should be recognized in the period in which the underlying sales transaction occurred. Sales tax originates from an underlying economic event, which are sales transactions. It is appropriate to recognize revenue at the time of the event.
8. Reimbursement grants are payments that are intended to reimburse specific types of expenditures for designated purposes or activities. Entitlements are payments that usually come from a higher level of government. A lower level of government is automatically entitled to an amount determined by a specific formula. Entitlements are often designated for a broad functional activity, such as education. Reimbursement grants have an inherit eligibility requirement. The recipient is only eligible if and when it occurs allowable costs. Expenditure driven grants are tied directly to specific expenditures, they should be recognized as revenues in the same period as the expenditures.
9. The revenue should be recognized as soon as it has made all eligibility requirements. There are none in this case. In its government-wide statements it can recognize revenue upon receipt of the pledge. In the fund statements, the donation cannot be recognized as revenue until it is available for expenditure.
Problems 4-1, 4-2, 4-7, and 4- 8
4-1.
1. d 6. d
2. a 7. b
3. b 8. b
4. c 9. a
5. c 10.a
4-2.
1. e 6.j
2.m 7.f
3.e 8.c
4.h 9.p
5.h 10.p
4-7.
1. Journal entries
A.Cash 200,000 Grant Revenue 200,000
B. Repair Expenditure 150,000 Cash 150,000
c. Cash 200,000 Deferred revenue 200,000
2. Revenue that should be reported:
Road Repair Grant – 200,000
Reimbursement grant -150,000
Both items should be reported as program revenues of governmental activities
4-8
Sales 250
Questions 6,7,8,9
6. Property taxes are recognized in the period that the taxes are levied. In the fund statements, the taxes must meet the additional criterion that they be available.
7. Sales tax should be recognized in the period in which the underlying sales transaction occurred. Sales tax originates from an underlying economic event, which are sales transactions. It is appropriate to recognize revenue at the time of the event.
8. Reimbursement grants are payments that are intended to reimburse specific types of expenditures for designated purposes or activities. Entitlements are payments that usually come from a higher level of government. A lower level of government is automatically entitled to an amount determined by a specific formula. Entitlements are often designated for a broad functional activity, such as education. Reimbursement grants have an inherit eligibility requirement. The recipient is only eligible if and when it occurs allowable costs. Expenditure driven grants are tied directly to specific expenditures, they should be recognized as revenues in the same period as the expenditures.
9. The revenue should be recognized as soon as it has made all eligibility requirements. There are none in this case. In its government-wide statements it can recognize revenue upon receipt of the pledge. In the fund statements, the donation cannot be recognized as revenue until it is available for expenditure.
Problems 4-1, 4-2, 4-7, and 4- 8
4-1.
1. d 6. d
2. a 7. b
3. b 8. b
4. c 9. a
5. c 10.a
4-2.
1. e 6.j
2.m 7.f
3.e 8.c
4.h 9.p
5.h 10.p
4-7.
1. Journal entries
A.Cash 200,000 Grant Revenue 200,000
B. Repair Expenditure 150,000 Cash 150,000
c. Cash 200,000 Deferred revenue 200,000
2. Revenue that should be reported:
Road Repair Grant – 200,000
Reimbursement grant -150,000
Both items should be reported as program revenues of governmental activities
4-8
Sales 250