Government wide statements and Fund statements
Comparison of government-wide financial statements with fund-based financial reporting.
Claire Mitchell
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GOVERNMENT –WIDE STATEMENTS AND FUND STATEMENTS 1
Government wide statements and Fund statements
Following the American Psychological Association’s Guidelines
Student Name
University Name
In your analysis of government-wide and fund statements, explain the distinction between these
two types of financial statements in governmental accounting. How do they differ in terms of
their purpose, reporting approach, and the audience they serve? Discuss the significance of
GASB No. 34 in shaping the current reporting model and the challenges faced by governments in
distinguishing between internal and external users. Use at least 750 words to support your
answer.
Government wide statements and Fund statements
Following the American Psychological Association’s Guidelines
Student Name
University Name
In your analysis of government-wide and fund statements, explain the distinction between these
two types of financial statements in governmental accounting. How do they differ in terms of
their purpose, reporting approach, and the audience they serve? Discuss the significance of
GASB No. 34 in shaping the current reporting model and the challenges faced by governments in
distinguishing between internal and external users. Use at least 750 words to support your
answer.
GOVERNMENT –WIDE STATEMENTS AND FUND STATEMENTS 2
Capital leases not subject to debt limitations
As per GASB, Capital Leases are treated as a purchase of long term asset from a long term debt
obligation. However, the court does consider the governmental enterprises, who themselves do
not have power to borrow but immediately need to purchase capital equipment. As such the
governmental enterprise buys the asset on capital lease, but the obligation is subject to the
appropriations being made by the legislature. To justify the instance of non-appropriation, the
government needs to certify non-availability of funds and that best efforts are made to procure
the same by a requisition being made in its budget, which is termed as non-appropriation clause
in the operation of a capital lease. Thus in such cases, capital leases are not subject to debt
limitations as per many jurisdictions.
Journal Entries recorded in Government wide statements and Fund statements
Fund statements Government wide statements
1) Cash Dr $20000000 Cash Dr $20000000
To Other Finance Source $20000000 To Bond Payable $20000000
(Capital Project Fund)
2) Expenditure Dr $20000000 Building Dr $20000000
To Cash $20000000 To Cash $20000000
3) No Depreciation is recorded Depreciation Expense Dr $300000
To Accumulated Dep $300000
Capital leases not subject to debt limitations
As per GASB, Capital Leases are treated as a purchase of long term asset from a long term debt
obligation. However, the court does consider the governmental enterprises, who themselves do
not have power to borrow but immediately need to purchase capital equipment. As such the
governmental enterprise buys the asset on capital lease, but the obligation is subject to the
appropriations being made by the legislature. To justify the instance of non-appropriation, the
government needs to certify non-availability of funds and that best efforts are made to procure
the same by a requisition being made in its budget, which is termed as non-appropriation clause
in the operation of a capital lease. Thus in such cases, capital leases are not subject to debt
limitations as per many jurisdictions.
Journal Entries recorded in Government wide statements and Fund statements
Fund statements Government wide statements
1) Cash Dr $20000000 Cash Dr $20000000
To Other Finance Source $20000000 To Bond Payable $20000000
(Capital Project Fund)
2) Expenditure Dr $20000000 Building Dr $20000000
To Cash $20000000 To Cash $20000000
3) No Depreciation is recorded Depreciation Expense Dr $300000
To Accumulated Dep $300000
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Subject
Accounting