Question

In: Accounting

Suppose a government could account for a municipal landfill in either a governmental fund or an...

Suppose a government could account for a municipal landfill in either a governmental fund or an enterprise fund. How would that decision change what was reported as an expenditure (governmental) or expense (enterprise) each year the landfill was in use?

Solutions

Expert Solution

Municipal Wasted landfill is often classified as enterprise funds. Many of the solid waste landfills in the US are operated by local governmental units. The Problem which arises is accounting for municipal landfills is that most of revenue is earned early in the useful life of the landfill, as various persons and organizations pay to dispose of waste: conversely, a significant portion of the costs, termed closure and post closure care costs are defined by US Government regulations, occur up to twenty to thirty years later. The GASB requires that these future costs be estimated and charged against periodic revenues on a “units of production” basis according to the amount of landfill capacity consumed during each period. If a municipal waste landfill is operated as an enterprise fund. If the municipal waste landfill is operated through a governmental fund, the expenditure and fund liability would be limited to the amount that will be paid with currently available resources and the remaining liability would be reported in the government wide statement.


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