ACIS+4124_5124+Chapter+4+PowerPoints+Part+3+Student

ACIS+4124_5124+Chapter+4+PowerPoints+Part+3+Student - 1...

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Unformatted text preview: 1 ACIS 4124/5124 Chapter 4 Part 3 Accounting for Governmental Operating ActivitiesIllustrative Transactions and Financial Statements 2 Exchange Transactions Transactions in which each party receives value essentially equal to the value given e.g., one party sells goods or services and the other buys Recognize the revenue when it is earned, and the expense/expenditure when it is incurred 3 Exchange-Like Transactions Exchange-like transactions are those in which the values exchanged may be related but not quite equal Example: Fees for professional licenses and permits Treat like an exchange transaction 4 Nonexchange Transactions External events in which a government gives/ receives value without directly receiving/giving equal value in exchange Revenue recognition depends on time requirements the period in which the resources are required to be (or may be) used In some cases, revenue recognition may be delayed until program eligibility requirements are met 5 Classes of Nonexchange Transactions Derived tax revenues e.g., income, sales and gas taxes Recognize revenue in period when underlying exchanged occurs Imposed nonexchange revenues e.g., property taxes and fines and penalties Recognize revenue when there is an enforceable legal claim or in the period for which levied in the case of property taxes 6 Classes of Nonexchange Transactions Government-mandated nonexchange transactions e.g., certain services funded by a higher level of government Recognize revenue when eligibility requirements met Voluntary nonexchange transactions e.g., grants from higher levels of government and certain private donations Recognize revenue when eligibility requirements met 7 Interfund Activity Reciprocal Interfund Activity: Internal Exchange Transactions Interfund Loans Nonreciprocal Interfund Activity: Interfund Transfers Reimbursements 8...
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ACIS+4124_5124+Chapter+4+PowerPoints+Part+3+Student - 1...

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