Reference no: EM132004086
Problem 1 - (Notes to the Financial Statements) Obtain a recent CAFR or the Basic Financial Statements of a state or local government (SLG).
Required - Study the Basic Financial Statements and related notes, make a copy of or prepare a table of contents to the notes, and answer the following questions from a note disclosure perspective:
1. What information can one learn about the state or local government from the notes that is not apparent from the face of the financial statements?
2. Pretend there were no notes. To what extent would the Basic Financial Statements be less useful? Why?
3. Which notes did you find the most interesting and useful? Why?
4. Which notes did you consider less useful? Why?
Problem 2 - (Incorporation of Component Units) Maynor County officials have concluded that several legally separate entities must be included as component units of its reporting entity in its CAFR. Three of those entities and the funds used to account for them are:
Puryear Corner School District General Fund
- Gymnasium Construction Fund
- Educational Buildings Improvement Fund
- Gymnasium Debt Service Fund
- Payroll Withholding Fund
- Food Services Enterprise Fund
- Central Printing Services Fund
Dalen-Fricke-Maynor Tri-County Airport Authority (Enterprise Fund)
Maynor County Public Employee Retirement System
The Maynor County board of commissioners also serves as the governing board of the Maynor County public employee retirement system, and the county appoints the voting majority of the board of the airport authority. The school board is elected.
Required - Indicate the reporting entity fund type (if any) in which each of the funds listed previously for the component units of Maynor County should be reported. Explain the reasons for your answer in detail.
Problem 3 - (Donation-Related Entries) Mr. Larry Leininger donated $3,000,000 to a nongovernment VHWO on June 17, 20X8.
1. Assume that no restrictions are placed on the use of the donated resources.
a. Prepare the required June 17, 20X8, entry.
b. Prepare any entries necessary in 20X9 if $400,000 of the gift is used to finance VHWO operating expenses.
2. Assume that the donation was restricted to research.
a. Prepare the required June 17, 20X8, entry.
b. Prepare any entries required in 20X9 as a result of spending $400,000 for research during 20X9.
3. Assume that the donation was restricted for fixed asset acquisitions.
a. Prepare the required June 17, 20X8, entry.
b. Prepare any entries required in 20X9 if $400,000 of the gift is used to purchase a new building. The building is placed in service at year end.
4. Explain or illustrate how each of the three preceding situations would be reported in the nongovernment VHWO's financial statements in 20X8 and in 20X9.