Textbook Problems Ch. 5 and 10
Autor: Christa Sullivan • January 23, 2017 • Research Paper • 2,104 Words (9 Pages) • 692 Views
Textbook Problems Ch. 5 and 10
Alexandria Dubois, Haley Duell, Renee Lemus, Christa Sullivan, Angela Williams
ACC/460
May 30, 2016
Michael Raponi
Textbook Problems Ch. 5 and 10
Ch. 5: Problem 5-11
Part a.
- Grant expenditure $2,000,000
Cash $2,000,000
To record grant expenditure (in 2013)
The state must recognize an expenditure as soon as the award is made. The purpose restriction does not impact the recognition of the expenditure, and neither does the school district’s intent to use the grant funds in a different year.
- Grant expenditure $8,000,000
Cash $7,000,000
Grants payable $1,000,000
To recognize a reimbursement grant expenditure (in 2013)
In 2013, the school district became eligible for $8,000,000 of the reimbursement grant. Thus, the state must recognize that amount as an expenditure. The remaining $2 million of the original $10 million grant is not recognized because the school district has not yet satisfied the eligibility requirement for receipt of reimbursement.
- The state should not recognize an expenditure or a liability for fiscal 2013. The expenditure or liability should not be recognized until the time requirement for the grant funds is satisfied. In this case, the school district did not receive the funds until after the end of fiscal 2013. The state’s fiscal year for 2013 ended on August 31, 2013, and the school district did not receive the funds until September 15, 2013. Thus, the funds are under a time requirement to be spent in the fiscal year from September 1, 2013 to August 31, 2014 (the fiscal year that they are received). Therefore, the state will not recognize the expenditure until fiscal 2014. The journal entry for fiscal 2014 would be as follows:
Grant expenditure $1,000,000
Cash $1,000,000
To recognize grant expenditure (in 2014)
- Grant expenditure $100,000
Cash $100,000
To record grant expenditure (in 2013)
The state must recognize an expenditure as soon as the award is made. The purpose restriction does not impact the recognition of the expenditure, and neither does the local university’s intent to use the grant funds in a different year. However, in this case the state has also attached an eligibility requirement to the award. So, only the actual monies paid are recorded as an expenditure in 2013. The remaining $400,000 will not be recognized until the university has performed the work to the state’s satisfaction, meeting the eligibility requirement. The state will then recognize the remaining amount as an expenditure using the following journal entry:
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