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1) A governmental entity is a recipient of the bequest of the multi-story office building that government intends to sell to support program activities.  Building has the historical of $425,000; a book value in the hands of the benefactor of $350,000; and a fair value of $525,000.  City had not however begun to try to sell building when its annual financial statements were issued. The city must recognize on its governmental fund financial statements, donations revenue of:

a) $-0-.
b) $350,000.
c) $425,000.
d) $525,000.

2) Wealthy philanthropist contributes three buildings to H-Town. Each of buildings has a fair market value of $5 million. H-Town plans to utilize Building 1 as a new fire station, but sell Buildings 2 and 3.

Building 2 is sold after year-end, but within availability period. Building 3 fails to sell by time H-Town issues financial statements. However, which of the following represents right way to record revenue from three buildings?

a). Dr Buildings                                            $15 million
Cr Deferred revenue                                       $5 million
Cr Revenue from donations                             $10 million
b). Dr Land held for sale                                 $10 million
Cr Deferred revenue                                        $5 million
Cr Revenue from donations                               $5 million
c). Dr Land held for sale                                   $5 million
Cr Deferred revenue                                        $5 million
d). Dr Land held for sale                                   $5 million
Cr Revenue from donations                               $5 million

Use the given information to answer the following problems.

City has a 6/30 fiscal year-end and has a policy of recognizing revenues/ expenditures when collected/paid or if expected to be collected/paid within 60 days of year-end.

City has sick leave benefit policy for its employees. Policy permits City employees one day of paid sick leave per month and allows them to collect sick leave they don't take.  Sick leave vests at a completion of fifth year of employment, and unused sick leave is paid in cash upon termination or retirement.  In fiscal year ended 6/30/07, City employees who are paid from General Fund, earned $1.4 million of sick leave, of which $.5 was taken. Of the balance, the City estimates $.1 million will be taken in the next sixty days, $.3 million will be taken in the next five years, $.2 million will vest, and $.3 million will never be taken.

3) Amount of sick pay expenditure which must appear on General Fund financial statements for the fiscal year ended 6/30/07 is

a) $ 1.4 million.
b) $ 1.3 million.
c) $ .6 million.
d) $ .5 million.

4) Amount of sick pay liability which must show on the General Fund balance sheet at 6/30/07 is

a) $.6 million.
b) $.2 million.
c) $.1 million.
d) No liability must appear.

5) Amount of sick pay expense which must show on government-wide financial statements for fiscal year ended 6/30/07 is

a) $1.4 million.
b) $1.3 million.
c) $.6 million.
d) $.7 million.

Accounting Basics, Accounting

  • Category:- Accounting Basics
  • Reference No.:- M99942

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