Governmental and Nonprofit Accounting
Quiz 10 :
Requirement #1 Requirement #2
Requirement #1 Requirement #2 Statement of Net Position: Deferred Outflows of Resources-Deferred Interest Expense Adjustment $ 384 Liabilities: Refunding Bonds Payable $3,700 Premium on Refunding Bonds ($350 − $70) 280 Statement of Revenues, Expenses, and Changes in Fund Net Position: Nonoperating Expenses: Bond issue costs $ 250 Interest 211
*Adjusting entries recognizing the capital grant revenues and operating grant revenues are needed if not recorded earlier, as is done in this solution. Requirement #2 The capital grant revenue of $10,000 would be reported as a separate line item after "income before other revenue, expenses, and transfers." The operating grant revenue of $30 is reported as part of nonoperating revenues. Requirement #3 The unspent balance from the capital grant and the transfer, 10,600 (10,000 + 5,000 - 5,400), would be reported as restricted cash. The liability for Unearned Capital Grant Revenues of $7,000,000 should be deducted from this amount leaving Restricted Net Position of $3,600,000. (Note that the $5,000 transferred in is considered restricted because it essentially is part of a required local match since the grant covers only 50% of the construction costs. If the remaining $5,000,000 match is from existing assets of the Enterprise Fund, The Restricted Net Position would be increased by that amount.) The Retainage Payable is a capital-asset related liability that must be deducted from the construction in progress to determine the Net Investment in Capital Assets of $9,400 (10,000 - 600). Note that only $3,000,000 of capital grant revenues have been earned at this point and no operating grant revenues have been earned. The question does not inquire about the operating statement presentation when the year ends after transaction 4, however.