Governmental and Institutional Account HW week 6

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Miami Dade College, Kendall *

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5140

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Finance

Date

Jun 6, 2024

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docx

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Governmental and Institutional Account HW 6 1. How are general long-term liabilities distinguished from other long-term liabilities of the government? How does the financial reporting of general long-term liabilities differ from the financial reporting of other long-term liabilities? General long-term liabilities arise from activities of the General Fund or some other governmental fund. They are reported only in the Governmental Activities column of the government-wide financial statements and not in any fund financial statements. In comparison, other long-term liabilities are reported in the financial statements of the appropriate proprietary or fiduciary fund and reported in the business-type activities column of the government-wide financial statements. 2. Explain the essential differences between regular serial bonds, deferred serial bonds, annuity serial bonds, and irregular serial bonds. How do regular serial bonds differ from term bonds? Regular Serials Bonds : these are typically issued by municipalities and paid off in equal installments over the bond's life. The interest payments are made at regular intervals, typically semi-annually principal is paid back at maturity. Deferred Serial Bonds are like regular serial bonds, but the interest payments are deferred for a period. The deferred interest is typically paid at maturity, along with the principal. Annuity serial Bonds: t hese are bonds that pay both interest and principal in equal installments over the bond’s life. The payments are typically made semi-annually. Irregular Serial Bonds: these are bonds that do not have equal payments. The payments may be of different sizes or be made at different intervals. Term bonds are issued for a specific term or maturity. Regular serial bonds are issued at regular intervals, typically semi-annually or annually. The main difference between the two is that term bonds have a specific maturity date, while regular serial bonds do not. 3. Explain the financial reporting for special assessment bonds when a government assumes responsibility for debt service should special assessment collections be insufficient and when the government assumes no responsibility whatsoever. Special assessment debt for which a government provides secondary backing should be reported as “special assessment debt with governmental commitment” in the governmental- wide statement of net position, while any portion of special assessment debt that is the direct responsibility of a government and will be repaid from general government resources( the 1

Governmental and Institutional Account HW 6 public benefits portion or the amount assessed against government-owned property). It should be reported like other general long-term liabilities. If the government is not responsible for special assessment debt, the debt should not be reported in the financial statements; however, the notes to the financial statements should disclose the amount of the debt, as well as the fact that the government is in no way liable for repayment but is only acting as an agent for the property owners in collecting the assessments, forwarding the collections to bondholders, and initiating foreclosure proceedings, if appropriate. 2

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