© prentice hall publishing – governmental and nonprofit accounting 7e 1-1 freeman / shoulders9 -...
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© 2003 Prentice Hall Publishing – Governmental and NonProfit Accounting 7e Freeman / Shoulders LEARNING OBJECTIVES For General Capital Assets and General Long-Term Liabilities –To maintain information needed for government-wide reporting purposes –To account for various types of transactions –To understand relationships and accounting for transactions with governmental funds –To understand reporting and note disclosure requirementsTRANSCRIPT
© Prentice Hall Publishing – Governmental and NonProfit Accounting 7e 1-1 Freeman / Shoulders 9 - 1
CHAPTER 9CHAPTER 9
GENERAL CAPITAL ASSETS; GENERAL CAPITAL ASSETS; LONG-TERM LIABILITIES; LONG-TERM LIABILITIES;
PERMANENT FUNDSPERMANENT FUNDS Introduction to Interfund-GCA-GLTL Accounting
© 2003 Prentice Hall Publishing – Governmental and NonProfit Accounting 7e Freeman / Shoulders 9 - 2
OVERVIEWOVERVIEWConcludes general government accounting of
the textDiscusses the relationship of and accounting for– General capital assets (GCA) and– General long-term liabilities (GLTL)to the governmental fund types
Introduces “Permanent Funds” (not common)
© 2003 Prentice Hall Publishing – Governmental and NonProfit Accounting 7e Freeman / Shoulders 9 - 3
LEARNING OBJECTIVESLEARNING OBJECTIVESFor General Capital Assets and General
Long-Term Liabilities
– To maintain information needed for government-wide reporting purposes
– To account for various types of transactions– To understand relationships and accounting
for transactions with governmental funds– To understand reporting and note disclosure
requirements
© 2003 Prentice Hall Publishing – Governmental and NonProfit Accounting 7e Freeman / Shoulders 9 - 4
LEARNING OBJECTIVESLEARNING OBJECTIVESFor Infrastructure– To account for and report general
infrastructure capital assets properly– To understand and apply the modified
approach for accounting for infrastructure capital assets
For Permanent Funds– To understand the nature and use of
Permanent Funds– To account for and report Permanent Funds
© 2003 Prentice Hall Publishing – Governmental and NonProfit Accounting 7e Freeman / Shoulders 9 - 5
GCA & GLTL ACCOUNTS GCA & GLTL ACCOUNTS OVERVIEW & ACCOUNTINGOVERVIEW & ACCOUNTING GASB specifies only reporting GCA
and GLTL in the government-wide financial statements
Accounting procedures will vary as GASB provides none
See Figure 9-1 as it 1. Summarizes the relationships of these
accounts with the governmental funds and2. Accumulates reporting information for
government-wide financial statements
© 2003 Prentice Hall Publishing – Governmental and NonProfit Accounting 7e Freeman / Shoulders 9 - 6
GCA & GLTL ACCOUNTSGCA & GLTL ACCOUNTS General capital assets– Book value of governmental (not
enterprise) funds capital assets– Classified by type (land, buildings, etc.)
General long-term liabilities– Capital asset-related debt (bonds, notes)– Vacation and sick leave, claims and
judgments, and non-capital debt
© 2003 Prentice Hall Publishing – Governmental and NonProfit Accounting 7e Freeman / Shoulders 9 - 7
GCA & GLTL ACCOUNTSGCA & GLTL ACCOUNTSNET ASSETSNET ASSETS
Invested in capital assets, net of related debt– Increases (Entries in Figure 9-1)
(1) Cost of GCA acquired(5) Capital asset-related debt retired
– Decreases (Entries in Figure 9-1)(2) Capital asset-related debt incurred(3) Depreciation expense(4) Net value of GCA dispositions
© 2003 Prentice Hall Publishing – Governmental and NonProfit Accounting 7e Freeman / Shoulders 9 - 8
GCA & GLTL ACCOUNTSGCA & GLTL ACCOUNTSNET ASSETSNET ASSETS
Restricted– Difference between restricted assets and non-
capital asset-related liabilities Unrestricted– Difference between remaining assets & liabilities
Increases (Entry in Figure 9-1)(7) Non-capital GLTL retired
Decreases (Entry in Figure 9-1)(6) Non-capital GLTL incurred
© 2003 Prentice Hall Publishing – Governmental and NonProfit Accounting 7e Freeman / Shoulders 9 - 9
GENERAL CAPITAL ASSETSGENERAL CAPITAL ASSETSExamples– Land– Buildings and improvements– Infrastructure– Equipment
Asset lives extend beyond single reporting period
The assets are not physically consumed by use, but economic use declines over time
© 2003 Prentice Hall Publishing – Governmental and NonProfit Accounting 7e Freeman / Shoulders 9 - 10
GENERAL CAPITAL ASSETSGENERAL CAPITAL ASSETSDefined as “all capital assets other than those
accounted for in proprietary or trust funds”Acquisition of general capital assets recorded
in governmental funds as expendable financial resources are used
However, capital assets are not recorded as governmental fund assets (since the assets are not financial resources)
© 2003 Prentice Hall Publishing – Governmental and NonProfit Accounting 7e Freeman / Shoulders 9 - 11
GENERAL CAPITAL ASSETSGENERAL CAPITAL ASSETS Acquisition means by governments
1. Purchase2. Construction (own forces or contracted)3. Capital lease4. Gift5. Foreclosure (taking of property for non-payment of taxes)6. Eminent domain (power of government to seize property,
and compensate owner, for public use)7. Escheat (reversion of property to a government in absence
of legal claimants)
© 2003 Prentice Hall Publishing – Governmental and NonProfit Accounting 7e Freeman / Shoulders 9 - 12
GENERAL CAPITAL ASSETSGENERAL CAPITAL ASSETSInitial valuation for assets acquired– Cost
Value of consideration given or receivedAll outlays incurred to bring asset to readiness
– Estimated original costAllowed by GASB standards, if cost not
available– Gift
Fair value when received(Continued)
© 2003 Prentice Hall Publishing – Governmental and NonProfit Accounting 7e Freeman / Shoulders 9 - 13
GENERAL CAPITAL ASSETSGENERAL CAPITAL ASSETS Initial valuation for assets acquired– Under foreclosure; lower of
1. Amount due for taxes / assessments, penalties and interest or
2. Appraised fair value– By eminent domain
Same manner as a purchase Compensation determined by the courts
– Through escheat process Fair value when acquired
© 2003 Prentice Hall Publishing – Governmental and NonProfit Accounting 7e Freeman / Shoulders 9 - 14
GENERAL CAPITAL ASSETSGENERAL CAPITAL ASSETS Classification for financial reporting– No set GASB standard for reporting– Most governments follow GFOA
recommendation as follows: Land (and improvements preparing it for use) Buildings (and improvements made part of building) Infrastructure (bridges, roads, sidewalks, dams) Machinery and equipment (automotive, office) Construction in progress (Incomplete construction)
© 2003 Prentice Hall Publishing – Governmental and NonProfit Accounting 7e Freeman / Shoulders 9 - 15
GENERAL CAPITAL ASSETSGENERAL CAPITAL ASSETS Infrastructure– Long-lived stationary (immovable) asset
systems Examples; roads, bridges, tunnels, drainage,
water, sewer and lighting systems, dams– Capitalization of major infrastructure
assets required under GASB 34, whereas it was previously optional
© 2003 Prentice Hall Publishing – Governmental and NonProfit Accounting 7e Freeman / Shoulders 9 - 16
GENERAL CAPITAL ASSETSGENERAL CAPITAL ASSETS Infrastructure– Capitalization (under GASB 34):
Now required, whereas it was previously optional Retroactive recording not required for small
governments under $10 million in 1999 revenues)1. Permits estimated cost for recording infrastructure
back to fiscal years ending after June 30, 1980 at implementation transition
2. Requires capitalization of only major asset systems acquired or significantly reconstructed or improved in fiscal years ending after June 30, 1980
© 2003 Prentice Hall Publishing – Governmental and NonProfit Accounting 7e Freeman / Shoulders 9 - 17
GENERAL CAPITAL ASSETSGENERAL CAPITAL ASSETS Infrastructure – initial capitalization– Criteria to define major infrastructure assets
requiring reporting under GASB 34 in first fiscal years ending after June 15, 1999
– Determination of major general infrastructure assets should be at network or subsystem level
1. Asset subsystems – at least 5% of the total cost of all general capital assets or
2. Asset networks – at least 10% of the total cost of all general capital assets
– Reporting of non-major networks encouraged, but not required
© 2003 Prentice Hall Publishing – Governmental and NonProfit Accounting 7e Freeman / Shoulders 9 - 18
GENERAL CAPITAL ASSETSGENERAL CAPITAL ASSETS
Capitalization policy– GAAP only applies to material and
significant items in the circumstances
– However, governments should consider– Legal compliance– Materiality and control considerations
when developing a capitalization policy
© 2003 Prentice Hall Publishing – Governmental and NonProfit Accounting 7e Freeman / Shoulders 9 - 19
GENERAL CAPITAL ASSETSGENERAL CAPITAL ASSETS
Capitalization policy– Legal compliance
Threshold levels ($1,500, $1,000, $500, $100) may not address– Materiality or– Different asset (buildings vs. equipment) classes
However, dollar threshold must comply with state and local laws and regulations
© 2003 Prentice Hall Publishing – Governmental and NonProfit Accounting 7e Freeman / Shoulders 9 - 20
GENERAL CAPITAL ASSETSGENERAL CAPITAL ASSETS Capitalization policy– Materiality
Item considered material if:1. Dollar value significant to financial statements2. Proper accounting required regardless of magnitude Important because:– Material items must conform with GAAP– Immaterial items need not conform to GAAP
Governments can set policy by asset class with different capitalization policies for each class
© 2003 Prentice Hall Publishing – Governmental and NonProfit Accounting 7e Freeman / Shoulders 9 - 21
GENERAL CAPITAL ASSETSGENERAL CAPITAL ASSETSCapitalization policy– Control considerations
May dictate capitalization of certain asset typesCost could be less than legal or materiality
thresholds for items such as– Personal computers– Guns– Communication devices
Immaterial items need not conform to GAAP
© 2003 Prentice Hall Publishing – Governmental and NonProfit Accounting 7e Freeman / Shoulders 9 - 22
GENERAL CAPITAL ASSETSGENERAL CAPITAL ASSETSRecording and reporting works of
art/historical treasures– Record at cost or fair value at donation date– Not required to capitalize if the collection
meets all three of the following criteria1. Held for exhibition, education, or research2. Protected, unencumbered, cared for, and preserved3. Policy requiring the proceeds of collection item sales
to be used to acquire other collection items
© 2003 Prentice Hall Publishing – Governmental and NonProfit Accounting 7e Freeman / Shoulders 9 - 23
GENERAL CAPITAL ASSETSGENERAL CAPITAL ASSETSRecording and reporting works of
art/historical treasures– Report donations as revenues in government-
wide Statement of ActivitiesWhether or not capitalizedIf not capitalized, also shown as an expense equal
to the revenue amount recognized– Report depreciation if capitalized and items
are exhaustible; otherwise not depreciated
© 2003 Prentice Hall Publishing – Governmental and NonProfit Accounting 7e Freeman / Shoulders 9 - 24
GENERAL CAPITAL ASSETSGENERAL CAPITAL ASSETSDepreciation / accumulated depreciation– Recorded in the GCA accounts– Depreciation expense
Reported in the governmental activities column of the government-wide Statement of Activities
Not an expenditure, so Not recorded in the governmental funds
– Accumulated depreciation Reported in the governmental activities column of the
government-wide Statement of Net Assets
© 2003 Prentice Hall Publishing – Governmental and NonProfit Accounting 7e Freeman / Shoulders 9 - 25
GENERAL CAPITAL ASSETSGENERAL CAPITAL ASSETS
Modified approach – infrastructure– Infrastructure depreciation not required
if government meets two requirements:
1. Uses an asset management system2. Documents that infrastructure being
preserved at a disclosed condition level
© 2003 Prentice Hall Publishing – Governmental and NonProfit Accounting 7e Freeman / Shoulders 9 - 26
GENERAL CAPITAL ASSETSGENERAL CAPITAL ASSETS
Modified approach – infrastructure– The asset management system for eligible
infrastructure should Have an up-to-date inventory of eligible assets Perform condition assessments Estimate annually the amount to maintain
and preserve the assets at the established condition level
© 2003 Prentice Hall Publishing – Governmental and NonProfit Accounting 7e Freeman / Shoulders 9 - 27
GENERAL CAPITAL ASSETSGENERAL CAPITAL ASSETS Modified approach – infrastructure– Documentary evidence requires professional
judgment to meet the second requirement that asset is being preserved
1. Complete condition assessments performed consistently at least every three years
2. Results of the three most recent condition assessments provide reasonable assurance that the assets are being preserved approximately at or above the condition level established and disclosed by the government
© 2003 Prentice Hall Publishing – Governmental and NonProfit Accounting 7e Freeman / Shoulders 9 - 28
GENERAL CAPITAL ASSETSGENERAL CAPITAL ASSETS Modified approach – infrastructure– If eligible assets meet requirements
Assets are not depreciated Expenditures incurred related to the assets
are -– Expended, if for repair and replacement– Capitalized, if increasing capacity or efficiency
– Once requirements are no longer met, assets should be depreciated in subsequent reporting periods
© 2003 Prentice Hall Publishing – Governmental and NonProfit Accounting 7e Freeman / Shoulders 9 - 29
GENERAL CAPITAL ASSETSGENERAL CAPITAL ASSETSAssets financed from GF or SRFs– Entry in General Fund
Expenditure recorded– Dr Expenditures – Capital outlay - $29,100– Cr Vouchers payable - $29,100
– Entry in General Capital Assets AccountsAsset capitalized– Dr Equipment - $29,100– Cr Net assets – Invested in capital assets - $29,100
© 2003 Prentice Hall Publishing – Governmental and NonProfit Accounting 7e Freeman / Shoulders 9 - 30
GENERAL CAPITAL ASSETSGENERAL CAPITAL ASSETSAssets financed by capital lease– Entry in General Fund
– Dr Expenditures – Capital outlay - $900,000– Cr Other financing sources – Capital lease - $850,000– Cr Cash - $50,000
– Entry in General Capital Assets Accounts– Dr Land – Under capital lease - $100,000– Dr Buildings – Under capital lease - $800,000– Cr Net assets – Invested in capital assets - $900,000
– Entry in General Long-Term Liabilities Accounts– Dr Net assets – Invested in capital assets - $850,000– Cr Capital lease liabilities - $850,000
© 2003 Prentice Hall Publishing – Governmental and NonProfit Accounting 7e Freeman / Shoulders 9 - 31
GENERAL CAPITAL ASSETSGENERAL CAPITAL ASSETSAssets financed from CPFs– Entry in Capital Projects Fund
Expenditure recorded– Dr Expenditures – Capital outlay - $1,270,000– Cr Vouchers payable - $1,270,000
– Entry in General Capital Assets AccountsAsset capitalized– Dr Construction in progress - $1,270,000– Cr Net assets – Invested in capital assets - $1,270,000
© 2003 Prentice Hall Publishing – Governmental and NonProfit Accounting 7e Freeman / Shoulders 9 - 32
GENERAL CAPITAL ASSETSGENERAL CAPITAL ASSETSAsset (land with an estimated value of $2,000)
acquired through foreclosure for taxes, penalties and interest owed of $1,000– Entry in Special Revenue Fund
Expenditure recorded / tax lien written off– Dr Expenditures – Capital outlay - $1,100– Cr Tax lien receivable - $1,000
– Entry in General Capital Assets Accounts Asset capitalized
– Dr Land - $1,100– Cr Net assets – Invested in capital assets - $1,100
© 2003 Prentice Hall Publishing – Governmental and NonProfit Accounting 7e Freeman / Shoulders 9 - 33
GENERAL CAPITAL ASSETSGENERAL CAPITAL ASSETSAssets acquired through gifts– No entry in governmental funds as no
financial resources were received/expended– However, a $1,500 capital contribution
revenue will be reported in the government-wide Statement of Activities
– Entry in General Capital Assets AccountsAsset capitalized at its fair value– Dr Land - $1,500– Cr Net assets – Invested in capital assets - $1,500
© 2003 Prentice Hall Publishing – Governmental and NonProfit Accounting 7e Freeman / Shoulders 9 - 34
GENERAL CAPITAL ASSETSGENERAL CAPITAL ASSETSSale, retirement or replacement accounting– General Capital Assets Accounts
1. Remove the asset-carrying value by – Debiting the related accumulated depreciation account(s) and– Crediting the asset account(s)– Reducing the Net Assets—Invested in Capital Assets account
– Fund receiving proceeds of sale2. Record any proceeds as “other financing sources” in
the accounts of the recipient governmental fund– Government-wide Statement of Activities
Report a gain or loss on disposal in the amount of the difference between items 1 and 2
© 2003 Prentice Hall Publishing – Governmental and NonProfit Accounting 7e Freeman / Shoulders 9 - 35
GENERAL CAPITAL ASSETSGENERAL CAPITAL ASSETSIntragovernmental sale– Enterprise Fund sells equipment at book value
to the GF - public works department– Enterprise Fund entry
Dr Due from General Fund - $15,000 Dr Accumulated depreciation - Equipment - $1,000 Cr Equipment - $16,000
– General Fund entry Dr Expenditures - Capital outlay - $15,000 Cr Due to Enterprise Fund - $15,000
– General Capital Assets Accounts entry Dr Equipment - $15,000 Cr Net assets – Invested in capital assets - $15,000
© 2003 Prentice Hall Publishing – Governmental and NonProfit Accounting 7e Freeman / Shoulders 9 - 36
GENERAL CAPITAL ASSETSGENERAL CAPITAL ASSETSReporting and Note Disclosures– Report in the governmental activities
column of the government-wide Statement of Net Assets
– Provide detailed capital assets information in the notes to the basic financial statements
– Distinguish those assets associated with governmental activities from those associated with business-type activities
© 2003 Prentice Hall Publishing – Governmental and NonProfit Accounting 7e Freeman / Shoulders 9 - 37
GENERAL CAPITAL ASSETSGENERAL CAPITAL ASSETSReporting and Note Disclosures– Notes should disclose (Figure 9-3)
GCA information by major classes of assets Any GCA that are not being depreciated Beginning- and end-of-year balances Accumulated depreciation presented
separately from historical cost Acquisitions of capital assets Sales or other dispositions Current-period depreciation expense, with
disclosure of the amounts charged to each of the functions in the Statement of Activities
© 2003 Prentice Hall Publishing – Governmental and NonProfit Accounting 7e Freeman / Shoulders 9 - 38
GENERAL LONG-TERM LIABILITIESGENERAL LONG-TERM LIABILITIES
Definition– Unmatured principal of general government
long-term debt– Excludes –
Matured debt of governmental fundsAll debt of proprietary funds or trust funds
– Not a liability of any specific fund
© 2003 Prentice Hall Publishing – Governmental and NonProfit Accounting 7e Freeman / Shoulders 9 - 39
GENERAL LONG-TERM LIABILITIESGENERAL LONG-TERM LIABILITIESExamples– Bond issues– Special assessment debt
(If government obligated in some manner)– Long-term notes– Claims and judgments – Compensated absences– Capital lease liabilities– Unfunded pension contributions
© 2003 Prentice Hall Publishing – Governmental and NonProfit Accounting 7e Freeman / Shoulders 9 - 40
GENERAL LONG-TERM LIABILITIESGENERAL LONG-TERM LIABILITIES
Relationship CPFs and GLTL accounts– Issuance of debt for Capital Projects Fund– CPF entry
Dr Cash - $1,000,000 Cr Other Financing Sources – Bond proceeds - $1,000,000
– GLTL entry Dr Net assets – Invested in capital projects - $1,000,000 Cr Serial bonds payable - $1,000,000
© 2003 Prentice Hall Publishing – Governmental and NonProfit Accounting 7e Freeman / Shoulders 9 - 41
GENERAL LONG-TERM LIABILITIESGENERAL LONG-TERM LIABILITIES
Relationship DSFs and GLTL accounts– Maturity of debt payable from DSF– DSF entry
Dr Expenditures - $160,000 Cr Matured Bonds Payable - $100,000 Cr Matured Interest Payable - $50,000 Cr Fiscal Agent Fees Payable - $10,000
– GLTL entry Dr Serial bonds payable - $100,000 Cr Net assets – Invested in capital projects - $100,000
© 2003 Prentice Hall Publishing – Governmental and NonProfit Accounting 7e Freeman / Shoulders 9 - 42
GENERAL LONG-TERM LIABILITIESGENERAL LONG-TERM LIABILITIES
Defaulted bonds– No specific GASB guidance– Authors preferred approach
Remove from General Long-Term LiabilitiesReport in DSF or GFDisclose default in notes to financial
statements
© 2003 Prentice Hall Publishing – Governmental and NonProfit Accounting 7e Freeman / Shoulders 9 - 43
GENERAL LONG-TERM LIABILITIESGENERAL LONG-TERM LIABILITIES
In-substance defeasance– When all conditions are met
Remove defeased debt from GLTL accounts Record advance refunding bonds in GLTL accounts
– If defeasance requirements are not met Old debt remains in GLTL accounts Proceeds from advance refunding bonds recorded in
DSF to service the old debt New advance refunding bonds recorded and reported
in GLTL accounts
© 2003 Prentice Hall Publishing – Governmental and NonProfit Accounting 7e Freeman / Shoulders 9 - 44
GENERAL LONG-TERM LIABILITIESGENERAL LONG-TERM LIABILITIES
Reporting and Note Disclosures– Report in the governmental activities
column of the government-wide Statement of Net Assets
– Report the GLTL by type– Annual CAFR often includes added
schedules– Provide detailed information in the notes
to the basic financial statements
© 2003 Prentice Hall Publishing – Governmental and NonProfit Accounting 7e Freeman / Shoulders 9 - 45
GENERAL LONG-TERM LIABILITIESGENERAL LONG-TERM LIABILITIES
Reporting and Note Disclosures– Notes should disclose (Figure 9-4)
Beginning and end-of-year balancesIncreases and decreases (separately presented)Portions of each item due within one yearFunds used to liquidate other long-term
liabilities (such as compensated absences and pension liabilities) in prior years
© 2003 Prentice Hall Publishing – Governmental and NonProfit Accounting 7e Freeman / Shoulders 9 - 46
PERMANENT FUNDSPERMANENT FUNDSAccount for resources held in trust by the
government for the benefit of the government (or its citizenry)
Principal of the trust is to be maintained intact (nonexpendable)
Exceptions:– Expendable trust funds benefiting the
government reported as Special Revenue Funds– Trust funds benefiting others reported as
Private-Purpose Trust Funds
© 2003 Prentice Hall Publishing – Governmental and NonProfit Accounting 7e Freeman / Shoulders 9 - 47
PERMANENT FUNDSPERMANENT FUNDSExamples requiring use– Receiving gift or bequest with the stipulation that
(a) Principal is to be kept intact and (b) Earnings are to be used for certain purposes
– Establishing an employee loan fund Both principal and earnings may be maintained intact Costs might be chargeable to principal
– Entering other trust agreements Maintain cemeteries, landmark buildings in perpetuity Earnings are expendable only for repairs/maintenance
© 2003 Prentice Hall Publishing – Governmental and NonProfit Accounting 7e Freeman / Shoulders 9 - 48
PERMANENT FUNDSPERMANENT FUNDS Financial reporting same as other
governmental funds with following required– Balance sheet (Figure 9-5)– Statement of revenues, expenditures, and changes in
fund balance If Permanent Fund includes both
– Nonexpendable principal amounts and– Expendable earningsthe fund balance may need classification between – “Fund Balance - Expendable” and– “Fund Balance - Nonexpendable’’
© 2003 Prentice Hall Publishing – Governmental and NonProfit Accounting 7e Freeman / Shoulders 9 - 49
PERMANENT FUNDSPERMANENT FUNDSSample transactions– (1) Accepting gift to maintain baseball field
Dr Cash - $210,000 Cr Revenue (donations) - $210,000
– (2) Purchasing investmentsDr Investments - $203,000Dr Accrued Interest receivable - $400 Cr Cash - $203,400
© 2003 Prentice Hall Publishing – Governmental and NonProfit Accounting 7e Freeman / Shoulders 9 - 50
PERMANENT FUNDSPERMANENT FUNDSSample transactions– (3) Recognizing investment income
Dr Cash - $3,000 Cr Accrued interest receivable - $400 Cr Interest revenues - $2,600
– (4) Selling investments at a gain (*) Dr Cash - $3,090 Cr Investments - $3,042 Cr Interest revenues - $35 Cr Gain on sale of investments - $13 (*)
(*) Gain added to trust corpus – See entry (9)
© 2003 Prentice Hall Publishing – Governmental and NonProfit Accounting 7e Freeman / Shoulders 9 - 51
PERMANENT FUNDSPERMANENT FUNDSSample transactions– (6) (a) PF-Transfer of earnings to GF (*)
Dr OFU, Transfer to GF - $5,000 Cr Cash - $5,000
– (6) (b) GF-Receipt of earnings from PF Dr Cash - $5,000 Cr OFS, Transfer from PF - $5,000
(*) Earnings usually transferred to Special Revenue funds when restricted for specific use