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Answer questions 8-1 through 8-7 completely

Questions and Exercises 8-1. Using the annual financial report obtained for Exercise 1-1, answering lowing questions: Examine the reconciliation between the governmental fund balances and the governmental-type activities net position. This might be on the gov- ernmental rund Balance Sheet or in a separate schedule in the basic finan- cial statements. List the major differences. What is the amount shown to capital assets? How much (if any) is due to the incorporation of internal service funds? Was an adjustment made for deferred property taxes or any other revenue? What is the adjustment due to the inclusion of long-term liabilities? What other adjustments are made? b. Examine the reconciliation between the governmental fund changes in fund balances and the governmental-type activities changes in net position. This might be on the governmental Statement of Revenues, Expenditures, and Changes in Fund Balances or in a separate schedule. List the major differences. How much is due to the difference between depreciation reported on the Statement of Activities and the reported expenditures for capital outlays on the Statement of Revenues, Expenditures, and Changes in Fund Balances? How much is due to differences in reporting expendi- tures versus expenses for debt service? How much is due to the incorpo ration of internal service funds? How much (if any) is due to differences in reporting proceeds versus gains on sale of capital assets? How much is due to additional revenue accruals? How much is due to additional expense accruals? What other items are listed? c. Examine the Statement of Net Position. Attempt to prove the Net Investment in Capital Assets figure from the information in the statement or the notes. List the individual items that are restricted; this might require examination of the notes to the financial statements, Government-wide Statements. Capital Assets, Long-Term Debt 247 d. Examine the Statement of Activities. List the net expenses (revenues) for governmental activities, business-type activities, and component units. List the change in net position for governmental activities, business-type activities, and component units. Attempt to find from the notes the com- ponent units that are discretely presented. e. Look throughout the annual report for disclosures related to capital assets. This would include the notes to the financial statements, any schedules, and information in the Management's Discussion and Analysis (MD&A). Summarize what is included. What depreciation method is used? Are lives of major classes of capital assets disclosed? f. Look throughout the annual report for disclosures related to long-term debt. This would include the notes to the financial statements, any sched- ules in the financial and statistical sections, and the MD&A. Summarize what is included. Are the schedules listed in this chapter included? What is the debt limit and margin? What is the direct debt per capita? The direct and overlapping debt per capita? 8-2. Identify the types of nonexchange revenues that are most likely to result in differences in the timing of recognition between the accrual and modified accrual bases of accounting. 8-3. The government-wide Statement of Net Position separately displays govern- mental activities and business activities. Why are internal service funds most commonly displayed as governmental activities? 8-4. Answer the following questions with regard to infrastructure: a. What is infrastructure? b. What are the two methods that might be used to record infrastructure expense from year to year? How is the accounting different under the two methods? c. What conditions must exist in order to use the modified approach to record and report infrastructure? d. What are the disclosure requirements if the modified approach is used? 8-5. Under the reporting model required by GASB, fund statements are required for governmental, proprietary, and fiduciary funds. Government-wide state- ments include the Statement of Net Position and Statement of Activities. Answer the following questions related to the reporting model: a. What is the measurement focus and basis of accounting for governmental fund statements; proprietary fund statements; fiduciary fund statements; and government-wide statements? b. Indicate differences between fund financial statements and government- wide statements with regard to component units; fiduciary funds; and location of internal service funds. c. Indicate what should be included in the Statement of Net Position catego- ries: Net Investment in Capital Assets; Restricted; and Unrestricted. 8-6. List some of the major adjustments required when converting from fund financial statements to government-wide statements. 248 Chapter 8 8-7. The following information is available for the preparation of the government wide financial statements for the City of Southern Springs as of April 30, 2020: Cash and cash equivalents, governmental activities Cash and cash equivalents, business-type activities Receivables, governmental activities Receivables, business-type activities Inventories, business-type activities Capital assets, net, governmental activities Capital assets, net, business-type activities Accounts payable, governmental activities Accounts payable, business-type activities General obligation bonds, governmental activities Revenue bonds, business-type activities Long-term liability for compensated absences, governmental activities $ 480,000 700,000 450,000 1.330.000 520,000 12,500,000 7.200.000 650,000 559.000 7,800,000 3,210,000 359,000 From the preceding information, prepare (in good form) a Statement of Net Position for the City of Southern Springs as of April 30, 2020. Assume that outstanding bonds were issued to acquire capital assets and restricted assets total $554.000 for governmental activities and $200,000 for business-type activities. Include a Total column. Questions and Exercises 8-1. Using the annual financial report obtained for Exercise 1-1, answering lowing questions: Examine the reconciliation between the governmental fund balances and the governmental-type activities net position. This might be on the gov- ernmental rund Balance Sheet or in a separate schedule in the basic finan- cial statements. List the major differences. What is the amount shown to capital assets? How much (if any) is due to the incorporation of internal service funds? Was an adjustment made for deferred property taxes or any other revenue? What is the adjustment due to the inclusion of long-term liabilities? What other adjustments are made? b. Examine the reconciliation between the governmental fund changes in fund balances and the governmental-type activities changes in net position. This might be on the governmental Statement of Revenues, Expenditures, and Changes in Fund Balances or in a separate schedule. List the major differences. How much is due to the difference between depreciation reported on the Statement of Activities and the reported expenditures for capital outlays on the Statement of Revenues, Expenditures, and Changes in Fund Balances? How much is due to differences in reporting expendi- tures versus expenses for debt service? How much is due to the incorpo ration of internal service funds? How much (if any) is due to differences in reporting proceeds versus gains on sale of capital assets? How much is due to additional revenue accruals? How much is due to additional expense accruals? What other items are listed? c. Examine the Statement of Net Position. Attempt to prove the Net Investment in Capital Assets figure from the information in the statement or the notes. List the individual items that are restricted; this might require examination of the notes to the financial statements, Government-wide Statements. Capital Assets, Long-Term Debt 247 d. Examine the Statement of Activities. List the net expenses (revenues) for governmental activities, business-type activities, and component units. List the change in net position for governmental activities, business-type activities, and component units. Attempt to find from the notes the com- ponent units that are discretely presented. e. Look throughout the annual report for disclosures related to capital assets. This would include the notes to the financial statements, any schedules, and information in the Management's Discussion and Analysis (MD&A). Summarize what is included. What depreciation method is used? Are lives of major classes of capital assets disclosed? f. Look throughout the annual report for disclosures related to long-term debt. This would include the notes to the financial statements, any sched- ules in the financial and statistical sections, and the MD&A. Summarize what is included. Are the schedules listed in this chapter included? What is the debt limit and margin? What is the direct debt per capita? The direct and overlapping debt per capita? 8-2. Identify the types of nonexchange revenues that are most likely to result in differences in the timing of recognition between the accrual and modified accrual bases of accounting. 8-3. The government-wide Statement of Net Position separately displays govern- mental activities and business activities. Why are internal service funds most commonly displayed as governmental activities? 8-4. Answer the following questions with regard to infrastructure: a. What is infrastructure? b. What are the two methods that might be used to record infrastructure expense from year to year? How is the accounting different under the two methods? c. What conditions must exist in order to use the modified approach to record and report infrastructure? d. What are the disclosure requirements if the modified approach is used? 8-5. Under the reporting model required by GASB, fund statements are required for governmental, proprietary, and fiduciary funds. Government-wide state- ments include the Statement of Net Position and Statement of Activities. Answer the following questions related to the reporting model: a. What is the measurement focus and basis of accounting for governmental fund statements; proprietary fund statements; fiduciary fund statements; and government-wide statements? b. Indicate differences between fund financial statements and government- wide statements with regard to component units; fiduciary funds; and location of internal service funds. c. Indicate what should be included in the Statement of Net Position catego- ries: Net Investment in Capital Assets; Restricted; and Unrestricted. 8-6. List some of the major adjustments required when converting from fund financial statements to government-wide statements. 248 Chapter 8 8-7. The following information is available for the preparation of the government wide financial statements for the City of Southern Springs as of April 30, 2020: Cash and cash equivalents, governmental activities Cash and cash equivalents, business-type activities Receivables, governmental activities Receivables, business-type activities Inventories, business-type activities Capital assets, net, governmental activities Capital assets, net, business-type activities Accounts payable, governmental activities Accounts payable, business-type activities General obligation bonds, governmental activities Revenue bonds, business-type activities Long-term liability for compensated absences, governmental activities $ 480,000 700,000 450,000 1.330.000 520,000 12,500,000 7.200.000 650,000 559.000 7,800,000 3,210,000 359,000 From the preceding information, prepare (in good form) a Statement of Net Position for the City of Southern Springs as of April 30, 2020. Assume that outstanding bonds were issued to acquire capital assets and restricted assets total $554.000 for governmental activities and $200,000 for business-type activities. Include a Total column

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