Accounting 54

Paraphrase this paper.
Explain how Cedar Rapids follows the Government Accounting Standards Board (GASB) Statement No. 34. Create a brief outline that showcases the flow.
Cedar Rapids follows the Government Accounting Standards Board Statement No. 34 by preparing the basic financial statements and required supplementary information (RSI) in accordance with the statement. The financial section of the citys CAFR begins with Managements discussion and analysis (MD&A) which introduces the basic financial statements and provides an overview of the governments financial activities. The basic financial statements consist of the government-wide financial statements fund financial statements and notes to the financial statements and it is followed by the Required supplementary information (RSI). As required the government-wide financial statements comprise of the statement of net assets which report the capital assets including the infrastructure assets. The depreciation expenses are reported in the statement of activities.
Read the management discussion and analysis (MD&A) section and describe two or more significant areas that were addressed by management.
In the MD&A section the management discusses the financial highlights of the city and an overview of the financial statements. Besides these it also discusses how record floods in June 2008 weighed down the communities throughout the region of the Midwestern United States where Cedar Rapids Iowa was the most affected and devastated by the damage. In this section the management goes on to address how the City Council is committed to the case of recovery of Cedar Rapids to its pre flood condition and make it a more vibrant community through a ten year financial plan.
From the notes of the financial statements describe which accounting policies are being utilized by the city.
The notes of the financial statements describe the accounting policies being utilized by the city which include that the government-wide financial statements are reported using the economic resources measurement focus and the basis of accounting used is the accrual basis of accounting. Similar policy is used for the proprietary fund and fiduciary fund financial statements. Governmental fund financial statements are reported with the current financial resources measurement focus and the modified accrual basis of accounting. Property taxes franchisee taxes licenses and related interest are subject to accrual basis. Also for governmental funds revenue from grant revenues is taken as deferred revenue until it becomes available.
What did you discover in the statistical section? How is the city doing? Provide an analysis.
The statistical section shows that in respect of the financial trends the net assets for primary government shows an increasing trend from 2003 to 2009 the net assets for business type activities show a declining trend and the net assets for governmental activities again show an increasing trend. The governmental activities program revenue and the governmental activities expenses have shown considerable increases of over 450 per cent since 2003 and 130 per cent over 2003 respectively. The revenue capacity from various sources of tax revenues have increased considerably over the decade. The debt capacity of the city government is seen by the citys current level of outstanding debt and its ability to issue additional debt in the future. It is seen that over the years from 2003 to 2009 the net debt of the city as a percentage of debt limit has changed from 73.73% to 62.24% thus showing that it has the capacity to take additional debt of 27.5%. The demographic and economic statistics show that over the years the per household income and the per capita income in the city has gone down since the year 2000 and the unemployment rate has increased from 1.4% to 6%. The operating information for the city shows that the city has been able to sustain and maintain its police fire and parks and recreation services; and has shown an increase in number of streets and the sanitary sewers with a decline in libraries.
As regards the government funds and proprietary funds included under the budget it is seen that Cedar Rapids is utilizing them by expending on public safety public works culture and recreation community and economic development general government debt service and capital projects out of the governmental funds; and business type out of proprietary funds. Some examples of items that can be included in the government funds include the special revenue funds and the debt service funds with the restriction that they can be used to report specific revenue sources to be used for a particular purpose in the case of the special revenue funds.
According to the GASB Statement no. 34 the infrastructure assets include those assets such as the bridges tunnels water mains and other stationary capital assets having a long life. Further it is provided that if the government can show that a network of these assets is being maintained at an arranged physical condition then the historical cost of these shall not be depreciated. The Cedar Rapidss infrastructure assets are held under Building and structures and Improvements other than building.
Describe the circumstances and provide the journal entries for the 2 entries that are going in to the general fund.
The two entries that go into the general fund and also the debt service fund and the capital projects fund would be in the circumstance of a transfer of funds from the general fund to the capital projects fund as well as to the debt service fund.
For transfer of funds to the capital projects fund
Dr. Other Financing uses Transfer out to Capital projects fund..$100000000
Cr. Due to Capital Projects fund..$100000000
For transfer of funds to the debt service fund
Dr. Other Financing uses Transfer out to Debt service fund..$5000000
Cr. Due to Debt service fund..$5000000
Part 2
Journal entries
Date
Particulars
Debit
Credit
1.
Pledges receivable
25000
Allowances for Uncollectible
Pledges
1250
Unrestricted Support contributions
23750
Cash
24000
Allowances for Uncollectible
Pledges
1000
Pledges receivable
25000
(Collection of pledges)
2.
Shares
15000
Temporarily Restricted Support
Contributions
15000
(Shares received as restricted contribution at fair value)
Cash Restricted for Musical
Instruments
15000
Shares
17000
(Sale of shares)
3.
Purchase violins
4000
Purchase cellos
6000
Purchase harp
5000
Cash Restricted for Musical
Instruments
15000
(Purchase of musical instruments)
Temporarily Restricted Net Assets
Reclassification Out
15000
Unclassified Net Assets
Reclassification In
15000
(Reclassification of Net Assets)
4.
Expenses contracted costs
5000
City of Cedar Rapids
5000
(billed the city for contracting costs)
5.
Expenses music lessons
7000
Expenses instrument maintenance
2000
Expenses administrative expense
1000
Cash
10000
In accordance with and as per the requirements of the Financial Accounting Standards Board (FASB) statements 117 a VHWO is required to prepare a statement of functional expenses which reports expenses by both functional and natural classification. This requirement is not needed for a NFPO is required to prepare only the which This is a two dimensional report as it shows expense by functional as well as natural classification. In natural classification the expenses are shown by type of expense such as salaries rent insurance office supplies and telephone. Further the statement reports on detailed program fund raising management and general expenses. The functional expenses are reported according to their functions which could be program expenses or/ and supporting services expenses. The program expenses are those expenses which are incurred by the organization in carrying out its programs. Thus if the organization has three programs each of these three programs will be listed in the statement along with the expenses of each of the programs. The supporting services expenses are reported in two sub groups namely management and general expenses. In order that the amount in each of these two sub groups is reported correctly it is essential to assign some of the salaries of management and general group to fundraising depending upon the time spent by employees in carrying out fundraising activities. For example a management employee might be involved for 25% of her time in fundraising activities but her total salary has been taken as management and general expenses. Thus a proportional allocation must be made under the two sub groups for a correct reporting of expenses.
Also as per the accrual method of accounting expenses must be reported in the accounting period in which they relate to the revenues concerned. If that is not clear then the expenses should be reported in the period in which they are used up. Where however it is not clear as to when an expense is matched to revenue the amount spent should be reported as an expense in the current period.