Reiver County has an Internal Service Fund (ISF) that operates a motor pool for
ID: 2560165 • Letter: R
Question
Reiver County has an Internal Service Fund (ISF) that operates a motor pool for various county agencies, all of which receive appropriations from the General Fund. The amounts billed by the ISF during 2012 were: General government programs - $60,000; Public safety programs - $10,000; and Social services programs - $30,000. These amounts are included in the total expenditures reported in the fund financial statements for each program.
Following is a condensed ISF operating statement:
Charges for services $120,000
Operating expenses 80,000
Operating income 40,000
Nonoperating expenses 10,000
Change in net position 30,000
Net position, beginning of period 180,000
Net position, end of period $210,000
Required:
a. Calculate how much Regina County should report as motor pool transportation expenses for each of its programs in its 2012 government-wide statement of activities.
b. Assume the ISF assets are: Cash of $20,000; and Capital assets, net of depreciation, of $180,000. Describe how the ISF assets are brought into the government-wide financial statements.
Solutions:
a. Intragovernmental "profit" percentage included in ISF billings (calculate):
Governmental program expenses after reduction for intragovernmental profit:
Expenditures
Fund-level
Statement
Reduction
Expenses
Government-wide statement
General Government
Public Safety
Social service
Totals
b.
Expenditures
Fund-level
Statement
Reduction
Expenses
Government-wide statement
General Government
Public Safety
Social service
Totals
Explanation / Answer
a. Intragovernmental "profit" percentage included in ISF billings (calculate): Governmental program expenses after reduction for intragovernmental profit: Expenditures Fund-level Statement 25% Reduction Expenses Government-wide statement General Government $60,000.00 $15,000.00 $45,000.00 Public Safety $10,000.00 $2,500.00 $7,500.00 Social service $30,000.00 $7,500.00 $22,500.00 Total $100,000.00 $25,000.00 $75,000.00 Intragovernmental profit percentage included in ISF billings Intragovernmental profit = $30,000/$120,000 25.00% b) The ISF assets are brought into the government-wide financial statements by adding to the governmental activity assets and offsetting credit to net position.The credit to reduce governmental expenditures for purposes of government-wide reporting is offset by a debit to net position