Chapter 08 – Accounting for Fiduciary Activities—Custodial and Trust Funds
8-16
Ch. 8, Solutions, Exercise 8-20 (Cont’d)
General Problem Information: Identification of fiduciary funds
Learning Objective: 8-2
Learning Objective: 8-3
Learning Objective: 8-5
8-21. a. GENERAL JOURNAL
Debits Credits
City of Albertville General Fund:
EQUITY IN POOLED INVESTMENTS 900,000
INVESTMENTS 890,000
REVENUES⎯CHANGE IN FAIR
VALUE OF INVESTMENTS 10,000
Albertville Schools:
EQUITY IN POOLED INVESTMENTS 4,230,000
Debits Credits
Richwood Township:
EQUITY IN POOLED INVESTMENTS 3,870,000
REVENUES⎯CHANGE IN FAIR
VALUE OF INVESTMENTS 20,000
INVESTMENTS 3,890,000
Chapter 08 – Accounting for Fiduciary Activities—Custodial and Trust Funds
8-17
Ch. 8, Solutions, Exercise 8-21 (Cont’d)
b. Investment Pool Trust Fund:
1. U.S. TREASURY NOTES 900,000
CERTIFICATES OF DEPOSIT 8,100,000
DUE TO GENERAL FUND 900,000
ADDITIONS⎯DEPOSITS IN POOLED
INVESTMENTS⎯ALBERTVILLE SCHOOLS 4,230,000
2. U.S. TREASURY NOTES 30,000
DUE TO GENERAL FUND 3,000
ADDITIONS⎯INVESTMENT EARNINGS⎯
CASH 3,010,000
CERTIFICATES OF DEPOSIT 3,010,000
DEDUCTIONS⎯WITHDRAWAL FROM POOLED
INVESTMENTS⎯RICHWOOD TOWNSHIP 3,010,000
CASH 3,010,000
Chapter 08 – Accounting for Fiduciary Activities—Custodial and Trust Funds
8-18
Ch. 8, Solutions, Exercise 8-21 b. (Cont’d)
Debits Credits
4. ACCRUED INTEREST RECEIVABLE 28,000
UNDISTRIBUTED EARNINGS ON
POOLED INVESTMENTS 28,000
5. UNDISTRIBUTED EARNINGS ON
POOLED INVESTMENTS 78,000
DUE TO GENERAL FUND 11,700
COMPUTATION: City’s GF Schools Township TOTAL
EQUITY AT BEGINNING OF YEAR $900,000 $4,230,000 $3,870,000 $9,000,000
% INTEREST 10.00% 47.00% 43.00% 100.00%
TREASURY NOTE DISTRIBUTION $ 3,000 $ 14,100 $ 12,900 $ 30,000
c. City of Albertville General Fund:
EQUITY IN POOLED INVESTMENTS 3,000
REVENUES⎯INVESTMENT EARNINGS 3,000
Chapter 08 – Accounting for Fiduciary Activities—Custodial and Trust Funds
8-19
Ch. 8, Solutions, Exercise 8-21 c. (Cont’d)
Debits Credits
Albertville Schools:
EQUITY IN POOLED INVESTMENTS 14,100
REVENUES⎯INVESTMENT EARNINGS 14,100
CASH 3,010,000
EQUITY IN POOLED INVESTMENTS 3,010,000
d. City of Albertville General Fund:
EQUITY IN POOLED INVESTMENTS 11,700
REVENUES⎯INVESTMENT EARNINGS 11,700
Richwood Township:
EQUITY IN POOLED INVESTMENTS 11,310
REVENUES⎯INVESTMENT EARNINGS 11,310
e. The investment trust fund would not report the General Fund’s interest in the pool
since the General Fund is an internal participant. The General Fund would report its
Chapter 08 – Accounting for Fiduciary Activities—Custodial and Trust Funds
8-20
Ch. 8, Solutions, Exercise 8-21 (Cont’d)
8-22.
a. EVERGREEN COUNTY
PASS-THROUGH CUSTODIAL FUND
GENERAL JOURNAL
Debits Credits
CASH 5,000,000
ADDITIONS—GRANT FUNDS FOR RECIPIENTS 5,000,000
DEDUCTIONS—PAYMENT OF GRANT FUNDS TO
RECIPIENTS 5,000,000
CASH 5,000,000
Note: Subsidiary ledgers would need to be maintained to reflect the funds distributed to each
of the recipients. It is assumed these funds would be immediately distributed and thus the
county would be allowed to aggregate additions and deductions.
Chapter 08 – Accounting for Fiduciary Activities—Custodial and Trust Funds
Ch. 8, Solutions, Exercise 8-22 (Cont’d)
Debits Credits
b. Aspen Township Performing Arts Capital Projects
Fund
CASH 1,400,000
REVENUES 1,400,000
Aspen Township Governmental Activities
c. Since the transactions are recorded in a custodial fund, they would not be reported
on the government-wide financial statements. The activities of the fund would be
included in a separate custodial funds column on the statement of fiduciary net
position and the statement of changes in fiduciary net position, as required by
GAAP.
General Problem Information: Pass-through custodial funds
Learning Objective: 8-2
Chapter 08 – Accounting for Fiduciary Activities—Custodial and Trust Funds
8-22
8-23.
1. CASH 148,807
ADDITIONS—MEMBER CONTRIBUTIONS 80,437
ADDITIONS—EMPLOYER CONTRIBUTIONS 68,370
3. CASH 39,960
ADDITIONS—INVESTMENT INCOME 39,960
4. CASH 227,812
5. DEDUCTIONS—ANNUITY BENEFITS 259,493
CASH 259,493
7. INTEREST RECEIVABLE 12,290
ADDITIONS—INVESTMENT INCOME 12,290
Chapter 08 – Accounting for Fiduciary Activities—Custodial and Trust Funds
8-23
Ch. 8, Solutions, Exercise 8–23 b. (Cont’d)
the statement of fiduciary net position and the statement of changes in fiduciary net
position, as required by GAAP.
General Problem Information: Pension trust fund
Learning Objective: 8-5
8-24. Some of the errors noted include:
• Each type of fiduciary fund should be reported in a separate column.
Therefore, the trust funds column should be separated into two columns, one
for the investment trust and one for the private-purpose trust.
• A total column is generally not used since the total is combining different
types of fiduciary funds. As shown, the columns do not foot and crossfoot
either.
• Normally custodial funds should not report accounts payable.
• The custodial funds would not report net position held in trust. However, a
custodial fund would report net position restricted to the participants for the
assets held in the custodial fund.
Chapter 08 – Accounting for Fiduciary Activities—Custodial and Trust Funds
8-24
Ch. 8, Solutions, Exercise 8–24 (Cont’d)
reported on the fiduciary financial statements. Rather the information would
be reported by the appropriate fund in the county’s required fund and
government-wide financial statements
General Problem Information: Fiduciary financial statements
Learning Objective: 8-4
Topic: Illustrative Financial Statements
Chapter 08 – Accounting for Fiduciary Activities—Custodial and Trust Funds
8-25
8-25.
a.
CITY OF MARIVILLE
Statement of Revenues, Expenses and Changes in Fiduciary Net Position
For the Year Ended
Pension Trust
Funds
Private-
Purpose Trust
Funds
Total Trust
Funds
Custodial
Funds
ADDITIONS
Contributions:
Employer
Members
Interest & dividends
$ 2,606,709
709,784
3,152,255
12,980
$ 2,606,709
709,784
3,165,235
Total additions
$ 6,468,748
$ 62,540
$ 6,531,288
$ 1,811,120
DEDUCTIONS
Benefits paid
Payments to participants
Administrative expenses &
other
2,457,082
156,357
32,477
2,457,082
188,834
1,759,099
32,021
Total deductions
$ 2,613,439
$ 32,477
$ 2,645,916
$ 1,791,120
Net increase (decrease)
in fiduciary net position
3,855,309
30,063
3,885,372
20,000
Net position beginning
41,123,848
164,082
41,287,930
240,932
Net position ending
$ 44,979,157
$ 194,145
$ 45,173,302
$ 260,932
Chapter 08 – Accounting for Fiduciary Activities—Custodial and Trust Funds
8-26
Ch. 8, Solutions, Exercise 25 (Cont’d)
b. CITY OF MARIVILLE
Statement of Fiduciary Net Position
As of Year End
Pension Trust
Funds
Private-
Purpose Trust
Funds
Total Trust
Funds
Custodial
Funds
ASSETS
Cash & cash equivalents
Receivables
141,227
54,182
195,409
206,937
Total assets
$ 44,979,157
$ 196,137
$ 45,175,294
$ 265,133
$ 1,479,147
$ 141,955
$ 1,621,102
$ 58,196
LIABILITIES
Accounts payable
Due to other funds
1,992
1,992
4,201
Total liabilities
$ –
$ 1,992
$ 1,992
$ 4,201
NET POSITION
Restricted for:
Pensions
44,979,157
44,979,157
Other governments
260,932
Total net position
$ 44,979,157
$ 194,145
$ 45,173,302
$ 260,932
Chapter 08 – Accounting for Fiduciary Activities—Custodial and Trust Funds
8-27
Ch. 8, Solutions, Exercise 8-25 (Cont’d)
General Problem Information: Fiduciary financial statements
Learning Objective: 8-4
Topic: Illustrative Financial Statements
8-26.
2023
2022
2021
Total pension liability
Service cost
123,225
$
125,440
$
127,950
$
Interest
189,730
182,580
169,960
Differences between expected and actual experience
1,250
(850)
625
Benefit payments (including refunds of
employee contributions)
(248,000)
Net change in total pension liability
66,205
75,590
80,575
Total pension liability, beginning
2,083,715
2,008,125
1,927,550
Total pension liability, ending
2,149,920
2,083,715
2,008,125
Plan fiduciary net position
Contributions—employee
32,450
$
36,240
$
30,170
$
Contributions—employer
98,620
102,530
91,550
Net investment income
18,990
(12,380)
(21,510)
Benefit payments (including refunds of
employee contributions)
(64,500)
(42,780)
(51,330)
Administrative expenses
(3,290)
(3,110)
(2,840)
Net change in plan fiduciary net position
82,270
80,500
46,040
Plan fiduciary net position, beginning
1,138,220
1,057,720
1,011,680
929,430
$
945,495
$
950,405
$
Plan fiduciary net position as a percentage
of total pension liability
56.77%
54.62%
52.67%
Covered payroll
502,150
$
485,218
$
489,810
$
Net pension liability as a percentage of
covered payroll
185.09%
194.86%
194.04%
BLUFF COUNTY EMPLOYEE RETIREMENT SYSTEM
SCHEDULE OF CHANGES IN THE COUNTY’S NET PENSION LIABILITY AND
RELATED RATIOS
LAST 3 FISCAL YEARS
Chapter 08 – Accounting for Fiduciary Activities—Custodial and Trust Funds
8-28
Ch. 8, Solutions, Exercise 8-26 (Cont’d)
(a) 66,205 − [123,225 + 1,250 − 248,000] = 189,730
(f) 929,430/1.8509 = 502,150
(g) 75,590 − [125,440 + 182,580 -850] = (231,580)
(h) 2,083,715 − 75,590 = 2,008,125
(i) 2,083,715 = beginning 2023 balance
(j) 80,500 − [36,240 + 102,530 – 42,780 – 3,110] = (12,380)
(k) 1,057,720 = ending 2021 balance
(l) 1,057,720 + 80,500 = 1,138,220
(q) 46,040(r) − [91,550 – 21,510 − 51,330 – 2,840] = 30,170
(r) 1,057,720 − 1,011,680 = 46,040
(s) 2,008,125(p) − 1,057,720 = 950,405
(t) 950,405(s)/489,810 = 194.04%
General Problem Information: Pension calculations
Learning Objective: 8-5
Topic: Pension Trust Funds
Bloom’s Taxonomy: Apply
Accreditation Skills tag: AACSB: Knowledge application, AICPA: Critical thinking
Level of Difficulty: Hard
1. c. 5. d.
3. b. 7. d.
4. e.
Chapter 08 – Accounting for Fiduciary Activities—Custodial and Trust Funds