Chapter 7pp - Capital Projects Funds Chapter 7 Learning...

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Capital Projects Funds Chapter 7
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Learning Objectives 1. When to use/not use the CPF, when required? 2. Know the sources of financial resources 3. Know the CPF life cycle, > one year 4. What costs should be charged to projects, OH 5. Arbitrage, Investment Income
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A Capital Project Fund MUST be used when they are legally or contractually required. Bond covenants or grant agreements MAY be used for any major, general government capital facilities. NOT used for routine equipment, leases, proprietary or trust fund assets.
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CPF Case Illustration [Page 271] Use the T-account worksheet to “follow the money.” Project Financing Total Percent Federal Grant 1,200,000 40 State Grant 600,000 20 Bond issue 900,000 30 Transfer from General Fund 300,000 10 TOTAL 3,000,000 100
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Sign Contract with contractor for $2.4M [Page 273] Encumbrances – Contract  Reserve for  Encumbrances 2,400,000 2,400,000
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Issue Bonds at a Premium [Page 273] Cash Expenditures – Bond Issue Costs  OFS – Bond Principal  OFS – Bond Premium 909,000 2,000 900,000 11,000 GC A GLTL NA = +$2,000 – $911,000 – $909,000 NOTE : Bond issue costs are not GCA, but are reported as noncurrent assets in the government-wide financial statements.
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Financing Received from state and GF [Page 273]
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Chapter 7pp - Capital Projects Funds Chapter 7 Learning...

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