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Chapter 17 - Accounting for state and local governments (Part II). After studying this chapter, you should be able to: Account for lease contracts where the state or local government finds itself as either lessor or lessee; recognize the liability caused by the eventual closure and postclosure costs of operating a solid waste landfill as well as for the compensated absences earned by government employeesr; record the donation and acquisition of works of art and historical treasures;. | Chapter Seventeen Accounting for State and Local Governments, Part II McGraw-Hill/Irwin Copyright © 2013 by The McGraw-Hill Companies, Inc. All rights reserved. Accounting for Leases The lease transfers ownership at the end of the lease term. The lease has a bargain purchase option. The lease term ≥75% of the asset’s estimated useful life. The minimum lease payments > 90% of the PV of the asset. For accounting purposes, leases must be identified as either Capital or Operating. GASB has adopted the same four criteria applied by FASB to identify a capital lease. LO 1 17- Accounting for Leases For accounting purposes, leases must be identified as either Capital or Operating. GASB has adopted the same four criteria applied by FASB to identify a capital lease. Accounting for Capital Leases Government-Wide Financial Statements: Record an asset and a liability at the present value of the minimum lease payments initially. Record an expense for interest and a reduction in the liability when the lease payment is made. Fund Financial Statements: Record the expenditure and other financing source to record the lease. Record an expenditure for interest and the lease principal when the payment is made. 17- Accounting for Capital Leases Government-Wide Financial Statements: Record an asset and a liability at the present value of the minimum lease payments initially. Record an expense for interest and a reduction in the liability when the lease payment is made. Fund Financial Statements: Record the expenditure and other financing source to record the lease. Record an expenditure for interest and the lease principal when the payment is made. Solid Waste Landfill The operation of a solid waste landfill creates long-term liabilities. The EPA imposes requirements that will require large outlays of resources to close a landfill in the future and to deal with such postclosure activities as groundwater monitoring. LO 2 17- Solid Waste Landfill The operation of a solid waste . | Chapter Seventeen Accounting for State and Local Governments, Part II McGraw-Hill/Irwin Copyright © 2013 by The McGraw-Hill Companies, Inc. All rights reserved. Accounting for Leases The lease transfers ownership at the end of the lease term. The lease has a bargain purchase option. The lease term ≥75% of the asset’s estimated useful life. The minimum lease payments > 90% of the PV of the asset. For accounting purposes, leases must be identified as either Capital or Operating. GASB has adopted the same four criteria applied by FASB to identify a capital lease. LO 1 17- Accounting for Leases For accounting purposes, leases must be identified as either Capital or Operating. GASB has adopted the same four criteria applied by FASB to identify a capital lease. Accounting for Capital Leases Government-Wide Financial Statements: Record an asset and a liability at the present value of the minimum lease payments initially. Record an expense for interest and a reduction in the liability .
