Question

In: Accounting

GASB Statement No. 34 specifies how governments report capital assets and long-term obligations. Describe where (1)...

GASB Statement No. 34 specifies how governments report capital assets and long-term obligations. Describe where (1) capital assets and (2) long-term obligations are reported in government financial statements.

Solutions

Expert Solution

The financial managers of governments are knowledgeable about the transactions, events, and conditions that are reflected in the government's financial report and of the fiscal policies that govern its operations. For the first time, those financial managers will be asked to share their insights in a required management's discussion and analysis (referred to as MD&A) by giving readers an objective and easily readable analysis of the government's financial performance for the year. This analysis should provide users with the information they need to help them assess whether the government's financial position has improved or deteriorated as a result of the year's operations.

Financial managers also will be in a better position to provide this analysis because for the first time the annual report will also include new government-wide financial statements, prepared using accrual accounting for all of the government's activities. Most governmental utilities and private-sector companies use accrual accounting. It measures not just current assets and liabilities but also long-term assets and liabilities (such as capital assets, including infrastructure, and general obligation debt). It also reports all revenues and all costs of providing services each year, not just those received or paid in the current year or soon after year-end.

These government-wide financial statements will help users:

  • Assess the finances of the government in its entirety, including the year's operating results
  • Determine whether the government's overall financial position improved or deteriorated
  • Evaluate whether the government's current-year revenues were sufficient to pay for current-year services
  • See the cost of providing services to its citizenry
  • See how the government finances its programs—through user fees and other program revenues versus general tax revenues
  • Understand the extent to which the government has invested in capital assets, including roads, bridges, and other infrastructure assets
  • Make better comparisons between governments.

In short, the new annual reports should give government officials a new and more comprehensive way to demonstrate their stewardship in the long term in addition to the way they currently demonstrate their stewardship in the short term and through the budgetary process.


Related Solutions

This week, we are studying general capital assets and long-term obligations. Using key provisions of GASB...
This week, we are studying general capital assets and long-term obligations. Using key provisions of GASB No. 34, or an article on Financial Reporting by a state or local government that is less than 5 years old, discuss one key point you found interesting on GASB 34 or on your chosen article and explain why this point is important to this week’s topic. Choose a provision or an article different from your classmates.
Bonds are long-term debt obligations primarily issued by governments and corporations. Bond pricing is based upon...
Bonds are long-term debt obligations primarily issued by governments and corporations. Bond pricing is based upon the present value of the future cash flows generated by the bonds. This includes periodic interest and principal repayment. The discount rate applied to the bond reflects the investor’s required rate of return Prompt: Bonds are long-term debt obligations primarily issued by governments and corporations. Bond pricing is based upon the present value of the future cash flows generated by the bonds. This includes...
The term capital structure indicates toSelect one:a. Total assets minus liabilitiesb. long term...
The term capital structure indicates toSelect one:a. Total assets minus liabilitiesb. long term debt and common stock equityc. All of the aboved. Shareholders equit
Please describe the financial statement disclosures made by Target Corporation recently regarding its long-term assets and...
Please describe the financial statement disclosures made by Target Corporation recently regarding its long-term assets and liabilities.
How do different kind of capital short and long-term, as well as long term foreign direct...
How do different kind of capital short and long-term, as well as long term foreign direct investments affect development prospects?
Present current and long term assets and liabilities on a balance sheet (statement of financial position)...
Present current and long term assets and liabilities on a balance sheet (statement of financial position) including require disclosures. Please explain.
Using two peer reviewed sources Define long-term operational assets. How are capital expenditures made to improve...
Using two peer reviewed sources Define long-term operational assets. How are capital expenditures made to improve the quality of assets? Would the answer change if the expenditure extended the life of the asset but did not improve quality? Explain... Capital expenditures are generally associated with long-term goals. Why do you think making wise decisions on capital expenditures is good for business?
Determine the following 2021 balance sheet items: 1. Current assets 2. Shareholders’ equity 3. Long-term assets 4. Long-term liabilities
The current asset section of the Excalibur Tire Company’s balance sheet consists of cash, marketable securities, accounts receivable, and inventory. On December 31, 2021, the balance sheet revealed the following: Inventory ................................$ 840,000 Total assets .........................$ 2,800,000 Current ratio ...................................2.25 Acid-test ratio ...................................1.2 Debt to equity ratio .........................1.8   Required: Determine the following 2021 balance sheet items: 1. Current assets 2. Shareholders’ equity 3. Long-term assets 4. Long-term liabilities  
Part 1 – Current and long-term investments: From the perspective of a potential long-term investor, describe...
Part 1 – Current and long-term investments: From the perspective of a potential long-term investor, describe what you might look for when examining the assets of a corporation. Include in your answer an understanding of how short-term assets and long-term operating assets are different and what role they each play in a company’s performance. Part 2 - What might the different asset balances indicate to you as they change from year-to-year? Part 3 - What relationships would you look for...
A firm has net working capital of $560. Long-term debt is $4,500, total assets are $8,350,...
A firm has net working capital of $560. Long-term debt is $4,500, total assets are $8,350, and fixed assets are $3,700. Q. What is the amount of total liabilities?
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT