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Government wide statements and Fund statements

Comparison of government-wide financial statements with fund-based financial reporting.

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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.

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    GOVERNMENT – WIDE STATEMENTS AND FUND STATEMENTS 2 Capital leases not subject to debt limitations As per GASB, Capital Lease s 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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