Why are general capital assets reported on the statement of net position on the government wide statements but not on the governmental funds Balance Sheet?
GASB 54 significantly changed the focus of fund balance reporting in two major areas — fund balance classifications and fund type definitions. For more information on the fund type definitions, see Governmental Funds. Show
Fund balance is reported from the perspective of the underlying resources within fund balance. GASB 54 components of fund balance identify constraints on how resources can be spent and the sources of those constraints. Agencies should note that there is not a one-to-one crosswalk from the old fund balance classifications to the GASB 54 fund balance classifications. GASB 54 does not affect the government-wide or accrual-based statement presentations and it does not change the amount of total fund balance on any fund statements. Governmental fund balance classification is reported in Note 32 — Fund Balances. For the recommended format, see Note 32 Sample. Fund Balance ClassificationsThe fund balance classifications discussed below apply to all governmental funds — general funds, special revenue funds, debt service funds, capital projects funds and permanent funds. ClassificationDefinitionExampleNonspendableThis classification includes amounts that cannot be spent because they are either:
Restrictions in place by the Texas Constitution, the federal government, debt covenants and/or external parties. Debt Service funds (FT03) has a restricted fund balance. CommittedAmounts that can only be used for specific purposes pursuant to constraints imposed by formal action of the state’s highest level of decision-making authority (the Legislature) are reported as committed fund balance. Those committed amounts cannot be used for any other purpose unless the Legislature removes or changes the specified use by taking the same type of action it employed to previously commit those amounts. Restrained for use by state legislative action (such as a law becoming state statute). Many of the General Revenue-Dedicated funds have a committed fund balance. AssignedAmounts constrained by the agency’s intent to be used for specific purposes that are neither restricted nor committed are reported as assigned fund balance.Restrained for use by agency governing board and/or agency head.UnassignedThis is the residual classification for the general fund. The net resources of the general fund in excess of nonspendable, restricted, committed and assigned fund balances (a surplus fund balance) are classified as unassigned fund balance. In all other governmental funds, the excess of nonspendable, restricted and committed fund balances over total fund balance (a deficit fund balance) is classified as unassigned. Note: With the exception of the stabilization fund, the general revenue fund (fund 0001) is the only fund that can report a positive unassigned fund balance. The stabilization fund (“the rainy day fund”) has an unassigned fund balance if it does not meet the criteria of specific conditions.* The long-term portion of loans and receivables can be classified as nonspendable in general revenue fund 0001 only. For all other governmental funds, classify the long-term portion of loans and receivables as restricted, committed or assigned, depending on the loan or receivable constraints.Classifying Fund Balance Amounts
The enabling legislation criteria are not met if any one of the following conditions is present. In these instances, classify the fund balance as committed rather than restricted.
There are currently no fund balances for agencies that meet the “restricted by enabling legislation” requirements.
Fund Balance Allocation ExamplesThe following examples illustrate the classification of fund balance in governmental funds. If you have any questions or need further clarification of fund balance requirements, contact your financial reporting analyst. Example 1A GR-Dedicated fund (FT01) has a deficit income summary (current year expenditures exceeded current year revenues), resulting in a negative unassigned fund balance. Since the GR-Dedicated fund is classified as fund type FT01, USAS automatically closes income summary to the unassigned GL 2325. Fiscal year-end fund balances are: Fund Balances (Deficits):AmountRestricted$ 100.00 Committed150.00 Assigned175.00 Unassigned(75.00)Total Fund Balances$ 350.00 Because a positive assigned fund balance cannot be reported with a negative unassigned fund balance, and a negative unassigned fund balance can only be presented if the total fund balance is negative — record an adjustment in USAS to allocate the unassigned fund balance of $(75.00) to the assigned fund balance. Once the allocation transaction processes, fiscal year-end fund balances are: Fund Balances (Deficits):AmountRestricted$ 100.00Committed150.00Assigned100.00Unassigned0.00Total Fund Balances$ 350.00 Example 2Example 2 uses the same scenario as Example 1, except the assigned fund balance is insufficient to absorb the entire negative unassigned fund balance. Fiscal year-end fund balances are: Fund Balances (Deficits):AmountRestricted$ 100.00 Committed150.00 Assigned175.00 Unassigned(200.00)Total Fund Balances$ 225.00 To correct these fund balances:
Once all USAS allocation transactions process, fiscal year-end fund balances are: Fund Balances (Deficits):AmountRestricted$ 100.00Committed125.00Assigned0.00Unassigned0.00Total Fund Balances$ 225.00 Example 3In the scenario below, rather than a positive (surplus) total fund balance as in Example 1, the income summary for the current fiscal year creates a negative (deficit) total fund balance: Fund Balances (Deficits):AmountRestricted$ 100.00 Committed150.00 Assigned175.00 Unassigned(500.00)Total Fund Balances$ (75.00) To correct these fund balances, process a USAS entry to eliminate the negative unassigned fund balance by allocating resources from the other fund balance classifications. Because the total fund balance is negative, there will still be a negative unassigned balance. Once all allocation transactions process, fiscal year-end fund balances are: Fund Balances (Deficits):AmountRestricted$ 0.00 Committed0.00 Assigned0.00 Unassigned(75.00)Total Fund Balances$ (75.00) Example 4If an agency has a fund that does not close to the unassigned fund balance, the fund balance allocation process is different. For example, the income summary for special revenue funds (FT02) automatically closes to restricted fund balance GL 2310. If the total fund balance is positive, a surplus or deficit balance in the unassigned fund balance is not allowed. The fund balance is reported as a restricted fund balance. Example 5However, if the total fund balance is negative, allocation entries are required to reclassify the fund balance from restricted to unassigned — since the restricted fund balance cannot report a negative amount. Fiscal year-end fund balances are: Fund Balances (Deficits):AmountRestricted$ (250.00)Total Fund Balances$ (250.00) Process a USAS entry to allocate the negative restricted fund balance to the unassigned fund balance. Once all allocation transactions process, fiscal year-end fund balances are: Fund Balances (Deficits):AmountRestricted$ 0.00 Unassigned(250.00)Total Fund Balances$ (250.00) USAS General Ledger AccountsThe following GL accounts are used to record fund balances in USAS. ClassificationUSAS GL Account NumberUSAS GL Account NameNonspendable2300Fd Bal – NonSpnd for Permanent Fund CorpusNonspendable2301Fd Bal – NonSpnd for InventoryNonspendable2302Fd Bal – NonSpnd for Prepaid ItemsNonspendable2303Fd Bal – NonSpnd for LT Loans, Contracts and ReceivablesRestricted2310Fd Bal – RestrictedCommitted2315Fd Bal – CommittedAssigned2320Fd Bal – AssignedUnassigned2325Fd Bal – UnassignedEncumbrancesA fund balance constraint specific to encumbrances similar to “reserved for encumbrances” is no longer reported. This does not impact the process of recording encumbrances in USAS for budgetary purposes. For more information, see Encumbrance Report and Lapsing of Appropriations (APS 018) (FPP A.019). Include encumbered funds in the restricted, committed or assigned category based on the constraints placed on them. Amounts encumbered for a specific purpose may be reported as assigned fund balance only if the resources:
The Comptroller’s office does not require that encumbrances be disclosed in agencies’ notes to the financial statements as this information is not used in the compilation of the state of Texas ACFR. However, agencies may choose to disclose encumbrances in their AFR notes to the financial statements. Imprest AccountsImprest accounts (previously categorized as “Fund Balance Reserved for Imprest Accounts”) are not reported as a separate fund balance category and are not classified in a different category from the remainder of the fund balance (that is, restricted, committed or assigned). For fund balance allocation templates, see the Working Papers. Government-wide Statement of Net Position Basis Conversion GL’sThe following basis conversion GLs are used to record the components of net position for governmental funds. Net Position, Net Investment in Capital Assets (GL 3505) – The difference between assets, deferred outflows, deferred inflows and liabilities that consists of capital assets (including restricted capital assets) less:
The portion of debt or deferred inflows of resources attributable to the unspent amount of related debt proceeds or deferred inflows of resources at fiscal year-end is included in the same net position component (restricted or unrestricted) as the unspent amount — not in the calculation of net position, net investment in capital assets. Net investment in capital assets for governmental activities and business-type activities is difficult to trace through notes and schedules on financial reports. For example, part of accounts payable may be capital accounts payable, but are not separately displayed in financial statements. For this reason, the agency must submit the Net Investment in Capital Assets working paper to show the calculation of the net investment in capital assets. Use the working paper’s PG# column to reference the source of the line item from the agency’s annual financial report. Restricted Net Position – The difference between assets, deferred outflows, deferred inflows and liabilities that consists of assets with constraints placed on their use that are either:
Record restricted net position to the following GLs:
Record nonexpendable restricted net position to the following GLs:
Record expendable restricted net position to the following GLs:
Unrestricted Net Position – The difference between the assets, deferred outflows, deferred inflows and liabilities not reported as net position, net investment in capital assets or restricted net position. What are general capital assets how are they reported in the fund and governmentGeneral capital assets are those assets acquired with the resources of governmental funds. They are reported as assets in the Governmental Activities column of the government-wide financial statements at historical cost. Those capital assets identified as depreciable are shown net of accumulated depreciation.
Are capital assets reported as a line item in the governmentAll other capital assets of the government are general capital assets. They should not be reported as assets in governmental funds but should be reported in the governmental activities column in the government-wide statement of net position.
What is the general rule for reporting capital assets in the governmental activities column of the governmentWhat is the general rule for reporting capital assets in the governmental activities column of the government-wide statement of net position? d. All general capital assets, except infrastructure assets, should be reported in that column.
How are general capital assets accounted for in government?Capital assets are reported at their historical cost net of accumulated depreciation in financial statements using the economic resources measurement focus and the accrual basis of accounting.
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