Chapter 8 - Chapter 8 Accounting for Fiduciary activities...

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8.1 Chapter 8 Accounting for Fiduciary activities: Agency and trust funds Fiduciary funds (accrual basis, except for certain liabilities of defined benefit pension plans and certain postemployment healthcare plans) Fiduciary funds (accrual basis): (pages 27, 28) 1. Statements : 1. Statement of fiduciary net assets-Fiduciary funds (Assets; Liabilities; Net assets held in trust) 2. Statement changes in fiduciary net assets-Fiduciary funds (Additions; Deductions; Change in net assets; Net assets: Beginning; Net assets: Ending) To account for assets held for others (private-purpose fiduciary activities) 1. Assets = Liabilities (Agency funds) 2. Not reported on government-wide financial statements; only reported on fund financial statements 3. Types: 1. Agency funds (re funds held in a temporary custodial capacity) 2. Investment trust funds 3. Private-purpose trust funds 4. Pension trusts funds (and other employee benefit trust funds) Public-purpose trusts (for government’s own programs or its citizens) should be recorded as governmental funds: 1. Special revenue fund 2. Permanent fund
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8.2 Agency funds: 1. To account for assets held for others 2. Assets = Liabilities (no fund balance or equity exists) 3. Agency relationships can be accounted for within governmental or enterprise funds (unless specifically required by law, GASB, governing board) 4. Agency fund for special assessment debt service: 1. Government has no legal obligation to assume special assessment debt in the case of default by the affected property owners 2. Government does: 1. Bill and collect from the specific property owners, and 2. Uses collections to pay the interest and principal due on the debt 3. Sample AJEs: 1. Assessments receivable-current Assessments receivable-deferred Due to special assessment bondholders-principal To record issuance of special assessment debt and first bill to affected property owners 2. Cash Assessments receivable-current Due to special assessment bondholders-interest To record collections for principal and interest on the debt 3. Due to special assessment bondholders-principal Due to special assessment bondholders-interest Cash To record payment of principal and interest on the debt 4. Assessments receivable-current Assessments receivable-deferred To reclassify current portion of assessment receivables
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8.3 Tax agency funds: 1. Use when one government unit will collect the taxes for several government units Composition tax rates for real estate taxes (property taxes), sales taxes 2. Ex: 1. Property owner will only receive one property tax bill which is payable to city 2. But the real estate tax bill may include taxes levied by the city, county, independent school district, and any special assessments which the property is subject to 3. The city will allocate the collections (less a collection fee) between the taxing authorities based on the relevant factor 1. Ex: 1. Location of the property (if collecting for several units) 2. On the same proportion as the original bill (if different authorities in the same geographic area) 4. AJEs (bill; collect; allocate; pay): 1.
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