A city government adds street lights within its boundaries at a total cost of $300,000. The lights should burn for at least 10 years but can last significantly longer if maintained properly. The city sets up a system to monitor these lights with the goal that 97 percent will be working at any one time. During the year, the city spends $48,000 to clean and repair the lights so that they are working according to the specified conditions. However, it spends another $78,000 to construct lights for several new streets in the city. Describe the various ways these costs could be reported on government-wide statements. 33P The City of Francois, Texas, has begun the process of producing its current comprehensive annual financial report (CAFR). Several organizations that operate within the city are related in some way to the primary government. The city’s accountant is attempting to determine how these organizations should be included in the reporting process. What is the major criterion for inclusion in a government’s CAFR? How does an activity or function qualify as a special purpose government? How is the legal separation of a special purpose government evaluated? How is the fiscal independence of a special purpose government evaluated? What is a component unit, and how is it normally reported on government-wide financial statements? How does a primary government prove that it can impose its will on a component unit? What is meant by the blending of a component unit?
A city government adds street lights within its boundaries at a total cost of $300,000. The lights should burn for at least 10 years but can last significantly longer if maintained properly. The city sets up a system to monitor these lights with the goal that 97 percent will be working at any one time. During the year, the city spends $48,000 to clean and repair the lights so that they are working according to the specified conditions. However, it spends another $78,000 to construct lights for several new streets in the city.
Describe the various ways these costs could be reported on government-wide statements.
33P
The City of Francois, Texas, has begun the process of producing its current comprehensive annual financial report (CAFR). Several organizations that operate within the city are related in some way to the primary government. The city’s accountant is attempting to determine how these organizations should be included in the reporting process.
- What is the major criterion for inclusion in a government’s CAFR?
- How does an activity or function qualify as a special purpose government?
- How is the legal separation of a special purpose government evaluated?
- How is the fiscal independence of a special purpose government evaluated?
- What is a component unit, and how is it normally reported on government-wide financial statements?
- How does a primary government prove that it can impose its will on a component unit?
- What is meant by the blending of a component unit?
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