Question A: Governments are not required to accrue interest on long-term debt in
ID: 2340995 • Letter: Q
Question
Question A: Governments are not required to accrue interest on long-term debt in governmental funds even if the interest is applicable to a current period and will be due the first day of the following year. Explain and justify the standards that permit this practice.
Question B: Per the provisions of Statement No. 34, governments must report their capital assets similar to businesses in their government-wide statements. Yet the information provided is still inadequate to facilitate the major types of decisions and judgments made by statement users. Do you agree? Explain.
Explanation / Answer
GASB 34 requires the reporting of general government activities in governmental funds using modified accrual accounting.
Exception
GASB 34 requires the reporting of general government activities in governmental funds using modified accrual accounting.
GASB Intrepretation 6 futher provides the guidance on when government fund liabilities and debt service expenditures to be recognized.