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Part III

Choice 1
What is infrastructure?
Infrastructure represents long-lived capital assets that are stationary in nature and
normally can be preserved for a significantly greater number of years than most
capital assets. This explanation is according to GASB statement 34.
What are the two methods ian entity may use to record infrastructure expense?
1. The modified Method : expense amounts are amounts that expend to extend
the life of the infrastructure; and are not required to record depreciation on that
infrastructure.
2. accounting method is normal accounting method in which the government may
record the infrastructure and depreciated as any other fixed asset over its useful
life.
What conditions must exist to use the modified approach to record and report
infrastructure?
Strict conditions must be implemented and governed by an established level of
government. In using the modified approach the government must have an asset
management system back has up to date inventory infrastructure and performs
condition assessments of those eligible infrastructure assets at least every three
years using a consistent and measurable scale and must estimate each year the
annual amounts in which to maintain and preserve those assets under the
conditions at or above the level established by the government.
4. What disclosure requirements are necessary if the modified approach is used by
entity?
In order to use a modified approach to a supplementary information schedules are
required and must be prepared.
1. One type of schedule must disclose the conditions assessed of that eligible
infrastructure assets.
2. A report must follow containing an estimated annual amount in which preserves
the eligible asset and then compared with the actual amount incurred for each of
the preceding five fiscal periods.
Choice 2
List and discuss the four categories of cash flows use and GASB standards. Include
an example of each item which would be included in each category.

1. Operating activities which would include receipts from customers


2. Capital and related financing activities would include proceeds and repayment of
any debt related to capital acquisitions
3. Investing activities would include such assets as cash that was used for
investment acquisitions.
4. Non-capital financing activities would include proceeds and repayments of debt
not clearly related to capital outlay.
Choice 3
Describe GASB requirements for accounting for investment trust funds.
A. a discussion of when the use of investment trust fund is appropriate
B. the investments to be included and excluded
C. the basis at which investments are to be reported
D. reporting of realizing unrealized gains and losses on investments
E. financial reporting
It applies to interest earning investment contracts, external investment pools, open
end mutual funds, debt securities, and equity securities that have readily
determined fair values. They are to be reported in the balance sheet at fair value,
which is the amount at which the investment could be exchanged in current
transaction between willing parties.

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