What are GASB requirements for bonded debt? Town Oaks’ residents want to start a fund to...

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What are GASB requirements for bonded debt?
Town Oaks’ residents want to start a fund to improve their localcommunity. Town Oaks, a gated community, has voted to create aneighborhood park with bonded debt. The bonds will be repaid by theresidents and the following transactions are related to parkdebt:
• The community has a tax burden for the park of $5,000,000,which is imposed on January 1, 20X7.
• Payments start at the beginning of the current year and willbe paid in 10 equal annual payments.
• 5% interest is due on the unpaid installments.
• Payments and interest on the unpaid payments was collected byDecember 31, 20X7.
• A small amount of the assessed receivables was reclassified tocurrent in the amount of 20X8 installments.
• The initial principal payment of $500,000 and the interest onthe debt was paid to bondholders on January 1, 20X8.
Required:
• Identify the type of fund the city should impose to accountfor this special assessed debt.
• Prepare journal entries for the city’s transactions.
• Identify how the city should report the fund in theirfinancial statements?
• Identify how the city should report special assessed debt intheir financial statements? •
Compare the treatments of special assessed debt from the UnitedStates with at least two other countries. Would the same reportingpractices be used and why?

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3.7 Ratings (635 Votes)

a Town Oaks use Agency Fund to account for the special assessment debt b LOCAL IMPROVEMENT DISTRICT FUND Event General Journal Debit Credit 1 Assessments Receivable Current 500000 Assessments Receivable Non Current Due to special assessment 4500000 Bondholders Principal 5000000 2 Cash 750000 Assessments Receivable Current Due to special assessment 500000 Bondholders Interest 250000 Assessments Receivable Current 500000 Assessments Receivable Non Current 500000 3 Due to Special Assessment Bondholders Principal 500000 Due to Special Assessment Bondholders Interest 250000 Cash 750000 c Assets and liabilities Other and Special assessment agency fund of reporting entity and appear in Statement of Fiduciary Net Position in seperate column and also it will then appear in no other basic financial statements If Town Oaks has multiple agency funds then it can choose to provide combining statement of agency funds in its CFAR d Since Town Oaks has no obligation in any manner for City special assessment debt hence the debt will no be included in the Town Oaks financial See Answer

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What are GASB requirements for bonded debt?Town Oaks’ residents want to start a fund to improve their localcommunity. Town Oaks, a gated community, has voted to create aneighborhood park with bonded debt. The bonds will be repaid by theresidents and the following transactions are related to parkdebt:• The community has a tax burden for the park of $5,000,000,which is imposed on January 1, 20X7.• Payments start at the beginning of the current year and willbe paid in 10 equal annual payments.• 5% interest is due on the unpaid installments.• Payments and interest on the unpaid payments was collected byDecember 31, 20X7.• A small amount of the assessed receivables was reclassified tocurrent in the amount of 20X8 installments.• The initial principal payment of $500,000 and the interest onthe debt was paid to bondholders on January 1, 20X8.Required:• Identify the type of fund the city should impose to accountfor this special assessed debt.• Prepare journal entries for the city’s transactions.• Identify how the city should report the fund in theirfinancial statements?• Identify how the city should report special assessed debt intheir financial statements? •Compare the treatments of special assessed debt from the UnitedStates with at least two other countries. Would the same reportingpractices be used and why?