Accounting Chapter 17 2 26 City Starts Solid Waste Landfill During

26. A city starts a solid waste landfill during 2010. When the landfill was

opened the city estimated that it would fill to capacity within 5 years and that the

cost to cover the facility would be $1.5 million which will not be paid until the

facility is closed. At the end of 2010, the facility was 20% full, and at the end of

2011 the facility was 45% full. On government-wide financial statements, which

of the following are the appropriate amounts to present in the financial

statements for 2011?

27. A city starts a solid waste landfill during 2010. When the landfill was

opened the city estimated that it would fill to capacity within 5 years and that the

cost to cover the facility would be $1.5 million which will not be paid until the

facility is closed. At the end of 2010, the facility was 20% full, and at the end of

2011 the facility was 45% full. If the landfill is judged to be a governmental fund,

what liability is reported on the fund financial statements at the end of 2011?

28. The employees of the City of Raymond earn vacation compensation that

totals $1,500 per week. During 2011, $30,000 in vacation time was taken and the

remainder is expected to be used during the latter part of next year. In the

government-wide financial statements, assuming there was no beginning

balance, what liability should be reported at the end of 2011?

29. The employees of the City of Raymond earn vacation compensation that

totals $1,500 per week. During 2011, $30,000 in vacation time was taken and

$48,000 is expected to be used during the latter part of next year. On fund

financial statements, what liability should be reported at the end of 2011?

30. The Town of Conway opened a solid waste landfill in 2001 that is now

filled to capacity. The city initially anticipated closure costs of $2 million. These

costs were not expected to be incurred until the landfill is closed. What is the

final journal entry to record these costs assuming the estimated $2 million

closure costs were properly recorded and the landfill is accounted for in an

enterprise fund?

31. What three criteria must be met to identify a governmental unit as a

primary government?

32. What three criteria must be met before a governmental unit can elect to

not capitalize and therefore report a work of art or historical treasure as an

asset?

33. What are the three broad sections of a state or local government’s CAFR?

34. What information is required in the introductory section of a state or local

government’s CAFR?

35. What information is required in the financial section of a state or local

government’s CAFR?

36. What is meant by the term fiscally independent?

37. What is meant by the term legally independent?

38. How is the Statement of Cash Flows for Proprietary Funds similar and

dissimilar to a Statement of Cash Flows for a for-profit business?

39. The City of Wetteville has a fiscal year ending June 30. Examine the

following transactions for Wetteville:

(A.) On 6/1/11, Wetteville enters into a 5-year lease on a copying machine. The

lease meets the criteria of a capital lease and carries an implied interest rate of

10%. The copier has a present value of $2,300. Wetteville has to put a $300 down

payment on the lease at the beginning of the lease with monthly payments

thereafter of $42.49.

(B.) On 6/5/11, Wetteville opens a new landfill. The engineers estimate that at

the end of 10 years the landfill will be full. Estimated costs to close the landfill

are currently at $3,500,000.

(C.) On 6/15/11, the end of the two-week pay period, Wetteville has $20,000 in

accrued vacation pay related to the payroll for the period. The city estimates that

$5,000 of this pay will be taken by the end of this summer and the rest will be

used next summer.

(D.) On 6/18/11, Wetteville receives a donation of a vintage railroad steam

engine. The engine will be put on display at the local town park. A fee will be

charged to actually climb up into the engine. The engine has been valued at

$500,000.

(E.) On 6/30/11, Wetteville makes its first payment on the leased copier. The

$42.49 payment includes $16.68 interest.

(F.) On 6/30/11, Wetteville estimates that the landfill is 2% filled.

Required:

Prepare the journal entries for the above transactions in the general fund, on the

dates mentioned for each lettered item, for the purposes of preparing the fund

financial statements.

40. The City of Wetteville has a fiscal year ending June 30. Examine the