An employment agency for individuals with disabilities works closely with the City of Hanover. The employment agency is legally separate from the city but still depends on it for financial support, which leads to a potential financial burden for the city. How should Hanover report the employment agency in its comprehensive annual financial report? Choose the correct.a. Not at all because the agency is legally separate.b. As a part of the general fund.c. As a component unit.d. As a related organization.

An employment agency for individuals with disabilities works closely with the City of Hanover. The employment agency is legally separate from the city but still depends on it for financial support, which leads to a potential financial burden for the city. How should Hanover report the employment agency in its comprehensive annual financial report? Choose the correct.a. Not at all because the agency is legally separate.b. As a part of the general fund.c. As a component unit.d. As a related organization.

Individual Income Taxes

43rd Edition

ISBN:9780357109731

Author:Hoffman

Publisher:Hoffman

Chapter5: Gross Income: Exclusions

Section: Chapter Questions

Problem 2RP

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An employment agency for individuals with disabilities works closely with the City of Hanover. The employment agency is legally separate from the city but still depends on it for financial support, which leads to a potential financial burden for the city. How should Hanover report the employment agency in its comprehensive annual financial report? Not at all because the agency is legally separate. As a part of the general fund. As a component unit. As a related organization.
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.a. What is the major criterion for inclusion in a government’s CAFR?b. How does an activity or function qualify as a special purpose government?c. How is the legal separation of a special purpose government evaluated?d. How is the fiscal independence of a special purpose government evaluated?e. What is a component unit, and how is it normally reported on government-wide financial statements?f. How does a primary government prove that it can impose its will on a component unit?g. What is meant by the blending of a component unit?
Public housing authorities are typical of the associated entities toward which GASB Statement No. 14 is directed.A city established a public housing authority to fund the construction of low-income residential homes within city limits. The authority is governed by a nine-person board of trustees. New trustees are nominated by the board itself, but are formally appointed by the city council. However, the city council has never rejected a board nominee. The trustees have complete responsibility for the day-to-day operations of the authority, but are required to obtain city council endorsement of the authority’s annual budget and must submit audited annual financial statements to the council. The authority is permitted to issue its own debt, which is guaranteed by the federal government.Approximately 90 percent of the authority’s day-to-day operating costs are paid by the Housing and Urban Development Department (HUD, a federal agency) and 10 percent by the city.The sources of the funds…
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A city constructs curbing in a new neighborhood and finances it as a special assessment. Under what condition should these transactions be recorded in an agency fund? Choose the correct.a. Never; the work is reported in the capital projects funds.b. Only if the city is secondarily liable for any debt incurred to finance construction costs.c. Only if the city is in no way liable for the costs of the construction.d. In all cases.
An accountant is trying to determine whether the school system of the City of Abraham is fiscally independent. Which of the following is not a requirement for being deemed fiscally independent? Choose the correct.a. Holding property in its own name.b. Issuing bonded debt without outside approval.c. Passing its own budget without outside approval.d. Setting taxes or rates without outside approval.
Wilmer County provides a defined benefit pension plan for its employees. The county accounts for the pension plan in a pension trust fund, which is included in the county's basic financial statements. In the years indicated, the county engaged in the following transactions related to the pension trust fund. Prepare all necessary journal entries. Clearly indicate the fund in which the entry is being made. If no entry is needed, please write "No entry required." a) In Year 1, the pension trust fund sent billings to the general fund and the City Utility (enterprise) Fund for the actuarially determined amount of required contributions. The general fund was billed $300,000 but paid only $220,000 during the year. The enterprise fund was billed $450,000 and paid $530,000. b) In Year 2, the pension trust fund sent billings to the general fund and the City Utility Fund for the actuarially determined amount of required contributions. The general fund was billed $320,000 and paid the entire…