Accounting For Governmental and Nonprofit Entities 15th Edition Wilson Solutions Manual

Accounting for Governmental and
Nonprofit Entities 15th Edition Wilson

Solutions Manual
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Chapter 08 - Accounting for Fiduciary Activities—Agency and Trust Funds
CHAPTER 8: ACCOUNTING FOR FIDUCIARY ACTIVITIES—

AGENCY AND TRUST FUNDS
OUTLINE
Number Topic Type/Task Status

(re: 14/e)
Questions:
8-1 Distinction between agency and trust funds Distinguish Same
8-2 Identifying trust funds and their purpose Explain New
8-3 Agency funds and payroll issues Explain Same
8-4 No fund equity in agency funds Explain Same
8-5 Agency funds for “pass-through” funds Define and Explain New
8-6 Investment pools Explain Same
8-7 Use of fair values for investments Explain and Compare New
8-8 Private and public purpose trusts Distinguish Same
8-9 Evaluating pension plans Explain New
8-10 Investment risk Define New
Cases:
8-1 Internet Case - PERS Locate and Explain Same
8-2 Identification of fiduciary funds Explain Revised
8-3 OPEB Plans Analyze New
Exercises/Problems:
8-1 Examine the CAFR Examine Same
8-2 Various agency and trust fund issues Multiple Choice 8-2, 8-5, 8-10
New
8-3 Various agency and trust fund issues Multiple Choice 8-8, 8-9, 8-10
New
8-4 Tax agency fund Journal Entries Same
8-5 Special assessment agency fund JEs and Analysis New
8-6 Fund identification JEs and Analysis New
8-7 Investment trust fund Journal Entries Same
8-8 Defined benefit pension plan Calculate Revised
8-9 Defined benefit pension plan statements Financial statements Same
8-10 Fiduciary financial statements Analysis Same
8-1
CHAPTER 8: ACCOUNTING FOR FIDUCIARY ACTIVITIES—

AGENCY AND TRUST FUNDS
Answers to Questions
8-1. Although in law there is a clear distinction between an agency relationship and a trust
relationship, in practice the legal distinctions are not sufficient to classify funds as agency
funds or trust funds. As the introduction to Chapter 8 explains, the name given the fund is
not a reliable criterion for identifying the types of transactions in which the fund may
engage. All factors, such as the enactment that created the fund and pertinent regulations,
must be examined to determine the nature of the fund and the transactions in which it
may engage. Generally, trust funds are more complicated than agency funds, requiring
greater representation and development of the beneficiary’s interest.
8-2. There are many different types of trust funds. For reporting purposes GASB classifies
trust funds as investment trusts, private-purpose trusts and pension trusts (also referred to
as pension and other employee benefit trusts). An investment trust fund is used to
account for and report the fund equity held by fund participants who are external to the
government operating the fund. Private-purpose trust funds record and report principal
and/or interest managed by a government for the benefit of an individual, private
organization or another government. The distinguishing characteristic is that the party
benefiting from the trust must be external to the government operating the trust. In
pension and other employee benefits trusts a government is managing benefits that
belong to government employees. As can be seen, in each case the government is acting
as a fiduciary, or in the best interest of parties outside the government.
8-3. No. Unless the use of an agency fund is mandated by law or by GASB standards,
accounting for agency relationships may occur within the funds where the agency
relationship arises. It is common practice, for example, to account for employee
withholding taxes, retirement contributions, and social security taxes within the funds
that account for the gross pay of the employees⎯in this case, the General Fund.
8-4. When an agency fund is used to account for assets, the assets belong to the party or
parties for whom the government acts as an agent, and not to the government itself. Thus,
agency fund assets are offset by liabilities equal in amount and no fund equity exists.
8-5. A pass-through agency fund might be used when a government (such as the state) is
“passing through” funds from one level of government (such as federal) to another level
of government (such as local). For a pass-through agency fund to be appropriate the
government acting as the conduit must have no administrative or direct financial
involvement. If the pass-through government provides monitoring, is involved in
determining eligibility of fund recipients or programs, has discretion in allocating funds,
or finances some direct program costs a pass-through agency fund is inappropriate.
8-2
Ch. 8, Answers (Cont'd)
8-6. With an internal investment pool the pool participants are all within the same
government, and thus accounting for the pool occurs in an agency fund. For external
financial reporting purposes, each participant reports its proportionate share of the pooled
assets and liabilities; that is, the agency fund is not reported in external financial
statements. The accounting for an external investment pool differs in the type of fund
used and the manner in which the pool’s assets and liabilities are reported. An external
investment pool is reported in an investment trust fund and has participants that are
outside the government administering the investment pool. As such, GASB standards
require that a trust fund be used to account for the investment pool’s resources. The
assets and liabilities of those participants external to the administering government are
reported in the statement of fiduciary net assets and the statement of changes in fiduciary
net assets.
8-7. GASB standards require that all but short-term investments be reported at fair value on
the balance sheet date. Any unrealized gains or unrealized losses resulting from
adjusting investments to fair value as of the balance sheet date are reported in a single
account called “Change in Fair Value of Investments.” The Change in Fair Value of
Investments account is included with investment income as additions on the statement of
changes in net assets (or as revenues on the operating statement for other funds). This
reporting differs from corporate reporting of unrealized gains and losses. Under
corporate reporting, only those investments identified as trading securities are reported at
fair value with the unrealized gains and losses included in the income statement.
However, for securities classified by management as available-for-sale the unrealized
gains and losses are excluded from the income statement and are reported as a component
of other comprehensive income.
8-8. The beneficiaries of a private purpose trust are individuals, organizations or governments
other than the government administering the trust; whereas, the beneficiary of a public
purpose trust is the government administering the trust. Since the beneficiary of the
private purpose trust is outside the administering government, the administering
government has a fiduciary responsibility to the beneficiary and as a result the private
purpose trust is reported as a private-purpose trust fund. A public purpose trust is
generally reported as either a permanent fund (i.e., the principal must remain intact) or a
special revenue fund (i.e., the income and/or principal may be spent for specified
purpose).
8-9. Three indicators that are useful in assessing the financial health of a pension plan are the
unfunded actuarial accrued liability, the funded ratio and the difference between the
required contribution and the amount actually contributed. Information about the
unfunded actuarial accrued liability and the funded ratio can be found on the schedule of
funding progress. If the unfunded actuarial accrued liability is growing or the funded
ratio is decreasing over time it indicates that sufficient resources are not being provided
to cover the benefits earned by employees. The schedule of employer contributions
8-3
Ch. 8, Solutions to Questions, 8-9, (Cont'd)
provides information on the percentage of the required contribution that has actually been
contributed to the plan. If actual contributions are not keeping pace with the required
contributions the plan’s actuarial accrued liability will continue to grow. Thus, the two
required schedules provide useful information in assessing the financial health of a
pension plan. The health of a plan is best determined by looking at the trend in the
information rather than looking at a single year.
8-10. The two types of risk that investment managers consider are credit risk and market risk.
Credit risk relates to the financial health of the issuer (or counterparty); that is, how able
is the issuer to meet principal and interest payments when due? The better the financial
health of the issuer, the lower the perceived risk and the required rate of return. Market
risk relates to economic and other factors that affect the overall investment market.
Solutions to Cases
8-1. a. CalPers was established by state law in 1932.

b. Almost all types of state and local government employers contribute to CalPERS,
including state agencies, cities, special purpose governments, and schools.
c. Over 1.5 million California public employees, retirees and their families are served by
CalPERS.
d. CalPERS administers 17 funds:
• 9 pension trust funds—5 of which are for defined benefit plans and 4 of which
are for defined contribution plans.
• 1 OPEB fund.
• 3 agency funds—an old age survivors fund, a special deposits fund for
earmarked funds, and a contingency reserve fund for health care payments and
remittances.
• 4 proprietary funds—one long-term care fund, one deferred compensation
fund and two health care funds.
e. The total value of fiduciary assets will vary with the most recent financial report. The
information can be obtained from the statement of fiduciary net assets.
f. The change in pension fund net assets will vary with the most recent financial report.
The information can be obtained from the statement of changes in pension net assets.
(Recall that agency and proprietary fund information would not be reported on a
statement of changes in fiduciary net assets.)
g. Refer to the most recent financial report’s required supplementary information –
schedule of funding progress. For some of the time periods reported, you will find a
funded ratio less than 100%. A ratio less than 100% indicates that the actuarial value
of the liabilities is greater than the actuarial value of the assets, resulting in an under
funded pension as of the valuation date.
h. CalPERS is a fiduciary component unit of the State of California. Thus, it is blended
with other pension financial information in the state’s statement of fiduciary net
assets and statement of changes in fiduciary net assets, and is not reported at all in the
government-wide financial statements.
8-4
Ch. 8, Solutions to Cases (Cont'd)
8-2. a. Tri-Centennial Fund. This is a private purpose trust fund since the resources will
benefit a broad constituency rather than just the citizens of the city.
b. Perpetual Care Fund. This describes a permanent fund as the principal amount must
be kept intact, but earnings of the fund can be used to provide care for the city’s own
cemeteries.
c. Debt Service Trust Fund. Because city management simply acts as a custodian for
the resources of the funds, this fund functions as an agency fund, a fiduciary fund.
d. School Impact Fee Fund. Since the city is acting in a custodial capacity with no
discretion in the use or distribution of these resources, the fund is an agency fund.
e. Housing Rehabilitation Fund. Since the resources are essentially funds of the
government and the program primarily benefits the government, it should be
accounted for as a special revenue fund.
f. Payroll Fund. Since payroll deductions are the assets of other governments/
organizations (e.g., federal government, state government, pension funds), an agency
fund is used to account for the deductions.
g. Telephone Commissions Fund. The city would use a special revenue fund, since it
primarily benefits from using the commissions to defray the costs related to operation
of the jail.
h. Block Grant Fund. Since the city is required to provide matching funds, the grant
would be reported in a special revenue fund.
i. Health Benefits Fund. This is a pension and other post employment benefits fund
since the city is providing a retirement benefit to those outside of government
(employees).
j. Unclaimed Property Fund. Since the state is maintaining the property until such
time as a legal claimant can be found, a private-purpose trust fund would be used.
Until the property reverts to the state it is considered a benefit to a party outside of
government (the as yet unfound claimant).
8-3. Following are answers based on the 2007 fiscal year CAFRs for the City and County of
Denver and New York City. The answers to the questions will vary with the year of the
CAFRs examined; therefore, the answers provided serve as a guide to what should be
considered in the analysis.
a. For 2007 the DERP Health Benefits plan AAL was $127,133,000. Over the period
from 2004 to 2007 the funded ratio has somewhat declined. There was about a 7
percent decline from 2004 to 2005, and since that time the funded ratio had a net
decline of about 2.5 percent. If the DERP Health Benefits plan is compared to the
DERP (which is the pension plan) we see that the pension plan is better funded than
the Health Benefits Plan. The funded ratio for the pension has ranged from 97.3
percent to 99.1 percent during the four year time period, while the Health Benefits
Plan has ranged from 72.9 percent to 82.6 percent.
b. The most recent year for which the AAL was calculated (2006) indicates a liability of
$56,077,151,000 for the New York City Health Benefits Plan. For the same time
period the funded ratio is 1.8 percent. Due to the recent adoption of the OPEB
standard, New York City does not provide trend information in its 2007 CAFR.
8-5
Ch. 8, Solutions to Cases, 8-3 (Cont'd)
However, a further review of the notes related to the New York City Health Benefits
Plan indicates that for fiscal year 2007 only 40.6 percent of the annual benefit cost
was actually contributed or paid; indicating a further increase in the liability. Without
trend information it is difficult to assess the status of the plan; however, a
considerable amount of the AAL is unfunded, leading one to conclude that New York
City will need to make sizeable future contributions to if it wishes to eliminate the
unfunded liability related to the benefit plan.
c. Based on the limited data available, it would appear that Denver has funded a
relatively greater percentage of its health benefit plan than New York City. As a
result, the future financial burden and cost related to the currently earned benefits
may not be as great for Denver as for New York City. The size of the programs and
economic factors also play a role in each city’s ability to fund its plans.
Solutions to Exercises and Problems
8-1. Each student will have an annual report from a different government unit; therefore, the
answers to these questions will differ from student to student.
8-2. 1. a. 6. b.
2. b. 7. b.
3. a. 8. c.
4. d. 9. d.
5. c. 10. c.
8-3. 1. c. 6. b.
2. a. 7. c.
3. d. 8. b.
4. c. 9. b.
5. a. 10. a.
8-6
Ch. 8, Solutions (Cont'd)
8-4. a. LINCOLN COUNTY

TAX AGENCY FUND
GENERAL JOURNAL
Debits Credits
1. TAXES RECEIVABLE FOR OTHER FUNDS
AND GOVERNMENTS⎯CURRENT 17,200,000
DUE TO OTHER FUNDS AND GOVERNMENTS 17,200,000
2. CASH 8,400,000
TAXES RECEIVABLE FOR OTHER FUNDS
AND GOVERNMENTS⎯CURRENT 8,400,000
3. DUE TO OTHER FUNDS AND GOVERNMENTS 8,400,000

DUE TO COUNTY GENERAL FUND 1,414,560
DUE TO TOWN OF SMITHTON 2,245,320
DUE TO LINCOLN COUNTY CONSOLIDATED
SCHOOL DISTRICT 3,825,360
DUE TO VARIOUS TOWNSHIPS 914,760
Shares: COMPUTATION Taxes 1% Fee Agency's

Collected Liability
County 2,752,000/17,200,000 * 8,400,000 = 1,344,000 + 70,560 1,414,560
Town 4,644,000/17,200,000 * 8,400,000 = 2,268,000 - 22,680 2,245,320
School 7,912,000/17,200,000 * 8,400,000 = 3,864,000 - 38,640 3,825,360
Townships 1,892,000/17,200,000 * 8,400,000 = 924,000 - 9,240 914,760
4. DUE TO COUNTY GENERAL FUND 1,414,560

DUE TO TOWN OF SMITHTON 2,245,320
DUE TO LINCOLN COUNTY CONSOLIDATED
SCHOOL DISTRICT 3,825,360
DUE TO VARIOUS TOWNSHIPS 914,760
CASH 8,400,000
8-7
Ch. 8, Solutions, 8-4 (Cont'd)
b. LINCOLN COUNTY
GENERAL FUND
GENERAL JOURNAL
Debits Credits
1. TAXES RECEIVABLE⎯CURRENT 2,752,000
ESTIMATED UNCOLLECTIBLE CURRENT TAXES 82,560
REVENUES 2,669,440
4. CASH 1,414,560
TAXES RECEIVABLE⎯CURRENT 1,344,000
REVENUES (COLLECTION FEES) 70,560
c. TOWN OF SMITHTON
GENERAL FUND
GENERAL JOURNAL
1. TAXES RECEIVABLE⎯CURRENT 4,644,000

ESTIMATED UNCOLLECTIBLE CURRENT TAXES 139,320
REVENUES 4,504,680
4. CASH 2,245,320
EXPENDITURES (COLLECTION FEES) 22,680
TAXES RECEIVABLE⎯CURRENT 2,268,000
d. The tax agency fund may prepare a statement of tax agency fund net
assets reflecting the asset and liability balances of the fund. Additionally,
the fund would be combined with any other agency funds that Lincoln
County may have and the total of the assets and liabilities for the agency
funds would be shown in a single agency fund column on the statement of
fiduciary net assets.
8-8
8-5. a. The Local Improvement District Fund would be considered an agency fund.
Since the city is providing administrative services for debt for which it has
no legal obligation, GASB standards indicate the services should be
accounted for using an agency fund.
b. LOCAL IMPROVEMENT DISTRICT FUND

GENERAL JOURNAL
Debits Credits
1. ASSESSMENTS RECEIVABLE⎯CURRENT 600,000
ASSESSMENTS RECEIVABLE⎯DEFERRED 5,400,000
DUE TO SPECIAL ASSESSMENT
BONDHOLDERS⎯PRINCIPAL 6,000,000
2. CASH 870,000
ASSESSMENTS RECEIVABLE⎯CURRENT 600,000
BONDHOLDERS⎯INTEREST 270,000
3. DUE TO SPECIAL ASSESSMENT

BONDHODERS⎯PRINCIPAL 600,000
BONDHOLDERS⎯INTEREST 270,000
CASH 870,000
8-9
c. Assets and liabilities of the local improvement district fund would appear in
a separate agency fund column on the statement of fiduciary net assets.
Since the Local Improvement District Fund is an agency fund it will appear
in no other basic financial statements. If there are several agency funds,
Deerville may opt to provide a combining statement of agency funds in its
CAFR. The combining statement would display the assets and liabilities
for each agency fund in a separate column.
8-10
8-6. a. St. George County should use a private-purpose trust fund to account for
the retained percentage. In this case the county is acting as a fiduciary for
the contractor (a private party). Since the government is not the expected
beneficiary of the fund it is a private-purpose rather than a special revenue
fund. The fund exists to meet a single contract requirement, not to serve
as a professionally managed investment pool; therefore, it would not be
considered an investment trust fund. Additionally, due to the contractual
administrative responsibilities of the county related to the fund (investing
and determining how much of the retained percentage will be distributed
to the contractor) it would not be considered an agency fund.
b. RETAINED PERCENTAGE FUND

GENERAL JOURNAL
Debits Credits
1. CASH 45,000
ADDITIONS—CONTRACTOR CONTRIBUTIONS 45,000
2. INVESTMENTS 45,000
CASH 45,000
3. CASH 675
ADDITIONS—INVESTMENT EARNINGS 675
4. ACCRUED INTEREST RECEIVABLE 1,350

ADDITIONS—INVESTMENT EARNINGS 1,350
8-11

Debits Credits
5. ADDITIONS—CONTRACTOR CONTRIBUTIONS 45,000
ADDITIONS—INVESTMENT EARNINGS 2,025
NET ASSETS HELD IN TRUST FOR
CONTRACTOR 47,025
8-7. a. GENERAL JOURNAL
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
INVESTMENTS 4,200,000
RICHWOOD TOWNSHIP:
EQUITY IN POOLED INVESTMENTS 3,870,000
INVESTMENTS 3,890,000
8-12

b. INVESTMENT POOL TRUST FUND:
Debits Credits
1. U.S. TREASURY NOTES 900,000

CERTIFICATES OF DEPOSIT 8,100,000
DUE TO CITY’S GENERAL FUND 900,000
ADDITIONS⎯DEPOSITS IN POOLED
INVESTMENTS⎯ALBERTVILLE SCHOOLS 4,230,000
ADDITIONS⎯DEPOSITS IN POOLED
INVESTMENTS⎯RICHWOOD TOWNSHIP 3,870,000
2. CASH 1,050,000
UNDISTRIBUTED EARNINGS ON
POOLED INVESTMENTS 50,000

CASH 1,050,000
3. CASH 50,000
4. ACCRUED INTEREST RECEIVABLE 28,250

8-13

Debits Credits
5. UNDISTRIBUTED EARNINGS ON
DUE TO GENERAL FUND 12,825
ADDITIONS⎯INVESTMENT EARNINGS⎯
ALBERTVILLE SCHOOLS 60,278
ADDITIONS⎯INVESTMENT EARNINGS⎯
RICHWOOD TOWNSHIP 55,147
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%
INTEREST DISTRIBUTION $ 12,825 $ 60,278 $ 55,147 $ 128,250
EQUITY IN POOL AT YEAR-END $912,825 $4,290,278 $3,925,147 $9,128,250
% INTEREST 10.00% 47.00% 43.00% 100.00%
c. CITY OF ALBERTVILLE GENERAL FUND:

REVENUES⎯INVESTMENT EARNINGS 12,825
ALBERTVILLE SCHOOLS:
RICHWOOD TOWNSHIP:
8-14

d. INVESTMENT POOL TRUST FUND:
Debits Credits
CASH 50,000
U.S. TREASURY NOTES 50,000
DUE TO CITY’S GENERAL FUND 100,000

CASH 100,000
CITY OF ALBERTVILLE GENERAL FUND:

CASH 100,000
COMPUTATION: City’s GF Schools Township TOTAL

EQUITY BEFORE WITHDRAWAL $912,825 $4,290,278 $3,925,147 $9,128,250
% INTEREST 10.00% 47.00% 43.00% 100.00%
WITHDRAWAL $100,000 $ -0- $ -0- $ 100,000
EQUITY IN POOL AT YEAR-END $812,825 $4,290,278 $3,925,147 $9,028,250
% INTEREST 9.00% 47.52% 43.48% 100.00%
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 interest in the investment pool in its financial
statements. Since the school is an external participant, the investment
trust fund would report the school’s interest in the statement of fiduciary
net assets and in the statement of changes in fiduciary net assets.
8-15
8-8. Calculation of annual pension cost and net pension obligation (NPO).
Refer to Illustration 8-14 and related discussion in Chapter 8 for the
information needed to solve this problem.
a. Calculation of annual pension cost:
Annual required contribution $ 606,700

Add: i X beginning NPO =
(.07 X $535,700) 37,499
Deduct: PV of beginning NPO (268,920)
Annual pension cost $ 375,279
b. Calculation of net pension obligation, December 31, 2011:
Annual pension cost (from part 1) $ 375,279

Less: Actual contribution (385,000)
Decrease in NPO during the year (9,721)
NPO, January 1, 2011 535,700
NPO, December 31, 2011 $ 525,979
8-16
Ch. 8, Solutions (Cont’d)
8-9. a. STATE OF NODAK

PUBLIC EMPLOYEE RETIREMENT SYSTEM
STATEMENT OF CHANGES IN PLAN NET ASSETS
FOR THE YEAR ENDED JUNE 30, 2011
(IN THOUSANDS OF DOLLARS)
ADDITIONS:
CONTRIBUTIONS
PLAN MEMBERS $ 112,100
EMPLOYER 197,800
TOTAL CONTRIBUTIONS 309,900
INVESTMENT INCOME
NET CHANGE IN FAIR VALUE OF INVESTMENTS 58,800
INTEREST AND DIVIDENDS 199,700
TOTAL INVESTMENT INCOME 258,500
TOTAL ADDITIONS 568,400
DEDUCTIONS:
ANNUITY BENEFITS 53,900
DISABILITY BENEFITS 14,000
REFUNDS TO TERMINATED EMPLOYEES 28,800
ADMINISTRATIVE EXPENSES 8,800
TOTAL DEDUCTIONS 105,500
NET INCREASE 462,900
NET ASSETS, JULY 1, 2010 1,577,000
NET ASSETS, JUNE 30, 2011 $2,039,900
8-17
b. STATE OF NODAK
PUBLIC EMPLOYEE RETIREMENT SYSTEM
STATEMENT OF PLAN NET ASSETS
AS OF JUNE 30, 2011
ASSETS:
CASH $ 16,000
ACCRUED INTEREST RECEIVABLE 33,200
INVESTMENTS, AT FAIR VALUE* 2,002,000
EQUIPMENT AND FIXTURES $25,200
LESS ACCUMULATED DEPRECIATION 3,100 22,100
TOTAL ASSETS 2,073,300
LIABILITIES:
ACCOUNTS PAYABLE AND ACCRUALS 33,400
NET ASSETS HELD IN TRUST FOR PENSION BENEFITS $2,039,900
* Assumes fair value
c. If the fund uses modified accrual the employer (Nodak) would report an
expenditure for the actual contribution made to the pension plan. If the fund
used accrual accounting an expense would be reported for the annual
pension cost, with any difference between the amount actually contributed
to the plan and the annual pension cost increasing or decreasing the net
pension obligation.
At the government-wide level the reporting is made based on accrual

accounting; therefore, the reported expense would equal the annual
pension cost with any difference between actual contribution and annual
pension cost increasing or decreasing the reported net pension obligation.
8-18
8-10. 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.
• Investments are to be reported at fair value. There needs to be an
indication as to whether investments are being reported at fair value.
• The agency funds would not report net assets held in trust.
However, an agency fund must report the liability (Due to Other Units
and Governments) to the participants for the assets held in the
agency fund. The agency liability has been misreported as net
assets in the example given.
• Net assets held in trust for the county should not be reported. Since
the county is the administering government, the assets and liabilities
of the fiduciary funds related to the county would not be 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.
8-19

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Accounting for Governmental and

Nonprofit Entities 15th Edition Wilson

CHAPTER 8: ACCOUNTING FOR FIDUCIARY ACTIVITIES—

Number Topic Type/Task Status

CHAPTER 8: ACCOUNTING FOR FIDUCIARY ACTIVITIES—

Ch. 8, Answers (Cont'd)

Ch. 8, Solutions to Questions, 8-9, (Cont'd)

8-1. a. CalPers was established by state law in 1932.

Ch. 8, Solutions to Cases (Cont'd)

Ch. 8, Solutions to Cases, 8-3 (Cont'd)

Solutions to Exercises and Problems

Ch. 8, Solutions (Cont'd)

8-4. a. LINCOLN COUNTY

3. DUE TO OTHER FUNDS AND GOVERNMENTS 8,400,000

Shares: COMPUTATION Taxes 1% Fee Agency's

4. DUE TO COUNTY GENERAL FUND 1,414,560

Ch. 8, Solutions, 8-4 (Cont'd)

1. TAXES RECEIVABLE⎯CURRENT 4,644,000

Ch. 8, Solutions (Cont'd)

b. LOCAL IMPROVEMENT DISTRICT FUND

3. DUE TO SPECIAL ASSESSMENT

Ch. 8, Solutions (Cont'd)

b. RETAINED PERCENTAGE FUND

4. ACCRUED INTEREST RECEIVABLE 1,350

Ch. 8, Solutions, 8-6 (Cont'd)

8-7. a. GENERAL JOURNAL

CITY OF ALBERTVILLE GENERAL FUND:

Ch. 8, Solutions, 8-7 (Cont'd)

1. U.S. TREASURY NOTES 900,000

CERTIFICATES OF DEPOSIT 1,050,000

4. ACCRUED INTEREST RECEIVABLE 28,250

Ch. 8, Solutions, 8-7 (Cont'd)

COMPUTATION: City’s GF Schools Township TOTAL

c. CITY OF ALBERTVILLE GENERAL FUND:

Ch. 8, Solutions, 8-7 (Cont'd)

DUE TO CITY’S GENERAL FUND 100,000

CITY OF ALBERTVILLE GENERAL FUND:

COMPUTATION: City’s GF Schools Township TOTAL

Ch. 8, Solutions (Cont'd)

a. Calculation of annual pension cost:

Annual required contribution $ 606,700

b. Calculation of net pension obligation, December 31, 2011:

Annual pension cost (from part 1) $ 375,279

Ch. 8, Solutions (Cont’d)

8-9. a. STATE OF NODAK

Ch. 8, Solutions, 8-9 (Cont'd)

* Assumes fair value

At the government-wide level the reporting is made based on accrual

Ch. 8, Solutions (Cont'd)

8-10. Some of the errors noted include:

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