Custom Government Accounting (University of Oklahoma)

by Patton, Hamlen

ISBN: 978-1-61853-449-1 | Copyright 2022

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Advanced Accounting, 4e (pg. 1.2)
Chapter 1: Intercorporate Investments: An Overview (pg. 1.2)
Introduction (pg. 1.3)
Motivations for Intercorporate Investments (pg. 1.3)
Types of Investments (pg. 1.4)
Intercorporate Debt Investments and Equity Investments with No Significant Influence (pg. 1.5)
Trading Investments (pg. 1.5)
Available-for-Sale Investments (pg. 1.6)
Held-to-Maturity Investments (pg. 1.7)
Equity Investments (pg. 1.8)
Review 1 • Trading, AFS, and HTM Debt Investments (pg. 1.9)
Investments with Significant Influence (pg. 1.9)
Accounting Using the Equity Method (pg. 1.9)
Equity in Net Income Calculation (pg. 1.10)
Other Comprehensive Income and the Equity Method (pg. 1.12)
Investee Losses and the Equity Method (pg. 1.12)
Impairment Testing (pg. 1.12)
Change to Significant Influence (pg. 1.13)
Joint Ventures (pg. 1.13)
Review 2 • Reporting for Equity Method Investments (pg. 1.14)
Controlling Investments (pg. 1.15)
Mergers, Consolidations, and Asset Acquisitions (pg. 1.15)
Stock Acquisitions (pg. 1.16)
Change to Controlling Interest (pg. 1.16)
Variable Interest Entities (pg. 1.17)
International Financial Reporting Standards For Intercorporate Investments (pg. 1.17)
Intercorporate Debt Investments and Equity Investments with No Significant Influence (pg. 1.17)
Investments with Significant Influence (pg. 1.18)
Joint Ventures (pg. 1.18)
Controlling Investments (pg. 1.19)
Review of Key Concepts (pg. 1.19)
Multiple Choice Questions (pg. 1.20)
Exercises (pg. 1.22)
Problems (pg. 1.26)
Review Solutions (pg. 1.34)
Chapter 2: Mergers and Acquisitions (pg. 1.36)
Introduction (pg. 1.37)
Motivations for Mergers and Acquisitions (pg. 1.37)
Types of Combinations (pg. 1.38)
Overview of Reporting for Combinations (pg. 1.39)
Standards of Reporting for Business Combinations (pg. 1.41)
Valuation of Assets Acquired and Liabilities Assumed (pg. 1.43)
Acquisition Date (pg. 1.43)
Identifying the Acquiring Company (pg. 1.43)
Measurement of Previously Reported Assets and Liabilities (pg. 1.44)
Identification and Measurement of Previously Unreported Intangibles (pg. 1.45)
Illustration of Reporting Assets Acquired and Liabilities Assumed (pg. 1.49)
Review 1 • Reporting Assets Acquired and Liabilities Assumed (pg. 1.51)
Measurement of Acquisition Cost (pg. 1.51)
Contingent Consideration (pg. 1.52)
Employee Compensation (pg. 1.53)
Acquisition-Related Costs (pg. 1.53)
Illustration of Reporting Consideration Given in an Acquisition (pg. 1.54)
Subsequent Changes in Asset, Liability, or Contingent Consideration Values (pg. 1.55)
Measurement Period (pg. 1.55)
Reporting Subsequent Changes in Asset and Liability Values (pg. 1.55)
Reporting Subsequent Changes in Contingent Consideration Value (pg. 1.56)
Review 2 • Reporting Assets and Liabilities Acquired, Consideration Paid, and Subsequent Events (pg. 1.57)
Bargain Purchases (pg. 1.57)
Special Issues: In-Process Research And Development, Preacquisition Contingencies, Deferred Tax Liabilities, And Step Acquisitions (pg. 1.59)
In-Process Research and Development (pg. 1.59)
Preacquisition Contingencies (pg. 1.59)
Acquired Deferred Tax Liabilities (pg. 1.60)
Step Acquisitions (pg. 1.61)
International Financial Reporting Standards for Business Combinations (pg. 1.62)
Review of Key Concepts (pg. 1.63)
Multiple Choice Questions (pg. 1.64)
Exercises (pg. 1.65)
Problems (pg. 1.72)
Review Solutions (pg. 1.83)
Chapter 3: Consolidated Financial Statements: Date of Acquisition (pg. 1.84)
Introduction (pg. 1.85)
Criteria for Consolidation (pg. 1.86)
Motivations for Off-Balance-Sheet Entities (pg. 1.86)
Standards for Consolidation (pg. 1.88)
Control and Consolidation of Equity Investments (pg. 1.88)
Control and Consolidation of Non-Equity Investments (pg. 1.89)
Review 1 • Identifying Consolidated Entities (pg. 1.94)
Consolidation at Date of Acquisition (pg. 1.94)
Consolidation of Financial Statements: Preliminary Issues (pg. 1.94)
Objectives of Consolidation (pg. 1.95)
Consolidation Working Paper (pg. 1.95)
Pushdown Accounting (pg. 1.103)
Review 2 • Consolidation with Identifiable Intangibles (pg. 1.106)
International Financial Reporting Standards for ConsolidationS (pg. 1.106)
The Concept of Control (pg. 1.106)
IFRS and U.S. GAAP Compared (pg. 1.107)
Review of Key Concepts (pg. 1.108)
Multiple Choice Questions (pg. 1.108)
Exercises (pg. 1.110)
Problems (pg. 1.117)
Review Solutions (pg. 1.127)
Chapter 4: Consolidated Financial Statements Subsequent to Acquisition (pg. 1.128)
Introduction (pg. 1.129)
Introduction to Consolidation Procedures (pg. 1.129)
Consolidation Eliminating Entries (pg. 1.130)
Illustration of Consolidation Process (pg. 1.131)
Consolidated Financial Statements (pg. 1.133)
Complete Equity Method as One-Line Consolidation (pg. 1.134)
Reporting Revaluations of Subsidiary Assets and Liabilities in Subsequent Years (pg. 1.135)
Previously Reported Assets and Liabilities (pg. 1.135)
Previously Unreported Identifiable Intangibles (pg. 1.137)
Goodwill (pg. 1.138)
Amortization and Impairment of Identifiable Intangibles and Goodwill: An Illustration (pg. 1.143)
Review 1 • Intangibles Impairment Testing (pg. 1.145)
Comprehensive Illustration: Consolidation in Subsequent Years (pg. 1.146)
Consolidation After One Year (pg. 1.146)
Consolidation After Two Years (pg. 1.149)
Review 2 • Consolidation in a Subsequent Year with Identifiable Intangibles (pg. 1.153)
IFRS for Acquired Intangibles (pg. 1.154)
Identifiable Intangibles (pg. 1.154)
Goodwill (pg. 1.155)
 Appendix to Chapter 4 (pg. 1.157)
Consolidation Eliminating Entries When the Parent Uses the Cost Method (pg. 1.157)
Review of Key Concepts (pg. 1.162)
Multiple Choice Questions (pg. 1.163)
Exercises (pg. 1.165)
Problems (pg. 1.172)
Review Solutions (pg. 1.184)
Chapter 5: Consolidated Financial Statements: Outside Interests (pg. 1.186)
Introduction (pg. 1.187)
Noncontrolling Interests at Acquisition Date (pg. 1.188)
Valuation of Noncontrolling Interests and Goodwill at Acquisition (pg. 1.188)
Measuring the Fair Value of Noncontrolling Interests (pg. 1.189)
Consolidation Eliminating Entries at Acquisition Date (pg. 1.190)
Noncontrolling Interests in the Consolidated Balance Sheet (pg. 1.191)
Consolidating Variable Interest Entities (pg. 1.192)
Noncontrolling Interests in Subsequent Years (pg. 1.193)
Consolidation at End of the First Year (pg. 1.193)
Noncontrolling Interests in the Consolidated Statement of Income and Comprehensive Income (pg. 1.196)
Consolidation at End of the Second Year (pg. 1.198)
Consolidation of VIEs in Subsequent Years (pg. 1.201)
Review 1 • Consolidation with Noncontrolling Interest at End of Third Year, U.S. GAAP (pg. 1.204)
Noncontrolling Interests and Bargain Purchases (pg. 1.204)
Bargain Purchase Consolidation at Date of Acquisition (pg. 1.205)
Bargain Purchase Consolidation at End of the First Year (pg. 1.206)
Bargain Purchase Consolidation at End of the Second Year (pg. 1.208)
International Financial Reporting Standards for Noncontrolling Interests (pg. 1.209)
Review 2 • Consolidation with Noncontrolling Interest at End of the Third Year, IFRS (pg. 1.213)
Consolidated Statement of Cash Flows (pg. 1.213)
Preparation of Consolidated Statement of Cash Flows (pg. 1.214)
Consolidated Statement of Cash Flows: An Illustration (pg. 1.214)
Review of Key Concepts (pg. 1.216)
Multiple Choice Questions (pg. 1.217)
Exercises (pg. 1.219)
Problems (pg. 1.226)
Review Solutions (pg. 1.239)
Chapter 6: Consolidated Financial Statements: Intercompany Transactions (pg. 1.242)
Introduction (pg. 1.243)
 Intercompany Service and Financing Transactions (pg. 1.244)
 Intercompany Profits (pg. 1.245)
Equity in Net Income and Noncontrolling Interest in Net Income (pg. 1.246)
 Intercompany Transfers of Land (pg. 1.247)
Eliminations in the Year of Transfer (pg. 1.247)
Eliminations in Subsequent Years (pg. 1.248)
Eliminations in Year of Sale to Outside Party (pg. 1.251)
 Intercompany Transfers of Inventory (pg. 1.251)
Unconfirmed Profit in Ending Inventory (pg. 1.253)
Unconfirmed Profit in Beginning Inventory (pg. 1.254)
Review 1 • Intercompany Eliminations: Land and Merchandise Transfers (pg. 1.256)
 Intercompany Transfers of Depreciable Assets (pg. 1.256)
Objectives of the Eliminations (pg. 1.257)
Eliminations in Year of Transfer (pg. 1.257)
Eliminations in Subsequent Years (pg. 1.258)
Eliminations in Year of Sale to Outside Party (pg. 1.260)
Review 2 • Intercompany Eliminations: Depreciable Asset Transfers (pg. 1.261)
 International Financial Reporting Standards for Intercompany Transactions (pg. 1.261)
 Comprehensive Illustration (pg. 1.262)
Review of Key Concepts (pg. 1.267)
Multiple Choice Questions (pg. 1.268)
Exercises (pg. 1.270)
Problems (pg. 1.276)
Review Solutions (pg. 1.288)
Chapter 8: Foreign Currency Transactions and Hedging (pg. 1.346)
 Foreign Currency Transactions and Risk (pg. 1.347)
 Foreign Currency Transactions (pg. 1.348)
Import and Export Transactions (pg. 1.348)
Review 1 • Foreign-Currency-Denominated Import and Export Transactions (pg. 1.352)
Foreign Borrowing and Lending Transactions (pg. 1.352)
 Hedging Foreign Exchange Exposures (pg. 1.353)
Types of Foreign Exchange Risk (pg. 1.353)
Derivative Instruments Used in Hedging (pg. 1.354)
Reporting Investments in Foreign Currency Derivatives (pg. 1.356)
Review 2 • Using Forward Contracts to Hedge Foreign-Currency-Denominated Import Transactions (pg. 1.362)
Review 3 • Using Forward Contracts to Hedge Foreign-Currency-Denominated Firm Commitments (pg. 1.367)
Review 4 • Using Forward Contracts to Hedge Foreign-Currency-Denominated Forecasted Transactions (pg. 1.369)
Improvements in Hedge Accounting Requirements (pg. 1.374)
 International Financial Reporting Standards for Foreign Currency Transactions and Hedging (pg. 1.375)
Qualifications for Hedge Accounting (pg. 1.375)
Comparison of IFRS and U.S. GAAP Hedge Accounting (pg. 1.376)
Financial Instruments Disclosures (pg. 1.378)
Review of Key Concepts (pg. 1.378)
Multiple Choice Questions (pg. 1.379)
Exercises (pg. 1.381)
Problems (pg. 1.386)
Review Solutions (pg. 1.393)
Accounting for Governmental & Nonprofit Organizations, 2e (pg. 2.1-1)
Chapter 1 Governmental and Nonprofit Accounting Environment and Characteristics (pg. 2.1-1)
Governmental and Nonprofit Organizations (pg. 2.1-3)
The Operating Environment (pg. 2.1-4)
Organizational Purposes (pg. 2.1-4)
Sources of Revenue and Relationship with Stakeholders (pg. 2.1-4)
Potential for Longevity (pg. 2.1-5)
Role of the Budget and Legal Requirements (pg. 2.1-5)
Review 1-1 (pg. 2.1-6)
Users and Uses of Accounting Information (pg. 2.1-6)
Objectives of Financial Reporting (pg. 2.1-7)
State and Local Government Financial Reporting (pg. 2.1-7)
Federal Government Financial Reporting (pg. 2.1-7)
Nonprofit Organization Financial Reporting (pg. 2.1-8)
Distinctive Accounting and Financial Reporting Characteristics (pg. 2.1-8)
Use of Fund Accounting (pg. 2.1-8)
Incorporation of Budgets into Accounting Systems (pg. 2.1-9)
Measurement Focus and Basis of Accounting (pg. 2.1-9)
Entity Wide and Fund-Level Reporting (pg. 2.1-9)
Financial Reporting of Restricted Resources (pg. 2.1-10)
Review 1-2 (pg. 2.1-10)
Accounting Principles and Standards (pg. 2.1-10)
Establishing Generally Accepted Accounting Principles (pg. 2.1-10)
Hierarchy of Generally Accepted Accounting Principles (pg. 2.1-11)
Review 1-3 (pg. 2.1-13)
Organization of This Textbook (pg. 2.1-13)
Questions (pg. 2.1-13)
Multiple Choice (pg. 2.1-14)
Exercises (pg. 2.1-15)
Solutions to Chapter 1 In-Chapter Review Questions (pg. 2.1-16)
Chapter 2 The Use of Funds in Governmental Accounting (pg. 2.2-1)
Fund Accounting-The Fund Categories (pg. 2.2-3)
Funds as Subdivisions of an Entity (pg. 2.2-3)
Why Governments Use Fund Accounting (pg. 2.2-4)
Fund Categories (pg. 2.2-5)
Financial Reporting with the Use of Funds (pg. 2.2-6)
Measurement Focus and Basis of Accounting (pg. 2.2-7)
Review 2-1 (pg. 2.2-9)
Governmental-Type Funds (pg. 2.2-9)
Measurement Focus, Basis of Accounting, and Financial Reporting (pg. 2.2-10)
General Fund (pg. 2.2-11)
Special Revenue Funds (pg. 2.2-15)
Capital Projects Funds (pg. 2.2-16)
Debt Service Funds (pg. 2.2-17)
Permanent Funds (pg. 2.2-18)
Review 2-2 (pg. 2.2-18)
Proprietary Type Funds (pg. 2.2-19)
Enterprise Funds (pg. 2.2-19)
Internal Service Funds (pg. 2.2-19)
Reporting on Proprietary Type Funds (pg. 2.2-20)
Review 2-3 (pg. 2.2-23)
Fiduciary Type Funds (pg. 2.2-23)
Pension (and Other Employee Benefit) Trust Funds (pg. 2.2-24)
Investment Trust Funds (pg. 2.2-24)
Private-Purpose Trust Funds (pg. 2.2-25)
Custodial Funds (pg. 2.2-25)
Reporting on Fiduciary Type Funds (pg. 2.2-25)
Review 2-4 (pg. 2.2-27)
Questions (pg. 2.2-27)
Multiple Choice (pg. 2.2-27)
Exercises (pg. 2.2-30)
Problems (pg. 2.2-32)
Chapter 2 Case Study (pg. 2.2-35)
Solutions to Chapter 2 In-Chapter Review Questions (pg. 2.2-35)
Chapter 3 Budgetary Considerations in Governmental Accounting (pg. 2.3-1)
Balanced Budget Laws (pg. 2.3-3)
Budgetary Types and Approaches (pg. 2.3-4)
General Fund and Special Revenue Fund Budgets (pg. 2.3-5)
Capital Budgets and Plans (pg. 2.3-5)
Budgetary Approaches (pg. 2.3-5)
The Budget Process-Enactment Phase (pg. 2.3-6)
Illustrations of Budget Documents (pg. 2.3-7)
Service Efforts and Accomplishments (pg. 2.3-8)
Review 3-1 (pg. 2.3-9)
Financing the Budget (pg. 2.3-9)
Raising Revenues (pg. 2.3-9)
Preparing Cash Forecasts to Determine Temporary Borrowing Needs (pg. 2.3-10)
Review 3-2 (pg. 2.3-11)
The Budget Process-Execution Phase (pg. 2.3-11)
Review 3-3 (pg. 2.3-13)
Classifying Revenues and Expenditures (pg. 2.3-13)
Revenue Classification (pg. 2.3-13)
Expenditure Classification (pg. 2.3-15)
Review 3-4 (pg. 2.3-16)
Budgetary Accounting (pg. 2.3-16)
Recording the Adopted Budget (pg. 2.3-16)
Recording Budgetary Interchanges and Other Revisions (pg. 2.3-17)
Review 3-5 (pg. 2.3-18)
Recording Encumbrances (pg. 2.3-19)
Recording Differences between Purchase Order and Invoice (pg. 2.3-20)
Review 3-6 (pg. 2.3-21)
Allotment Systems (pg. 2.3-21)
Detailed Illustration (pg. 2.3-21)
Review 3-7 (pg. 2.3-26)
Questions (pg. 2.3-26)
Multiple Choice (pg. 2.3-26)
Exercises (pg. 2.3-28)
Problems (pg. 2.3-31)
Chapter 3 Case Study-Central Falls Bankruptcy (pg. 2.3-33)
Solutions to Chapter 3 In-Chapter Review Questions (pg. 2.3-35)
Chapter 4 An Introduction to General and Special Revenue Funds (pg. 2.4-1)
Background (pg. 2.4-3)
The General Fund (pg. 2.4-3)
Special Revenue Funds (pg. 2.4-4)
Revenue and Expenditure Recognition (pg. 2.4-5)
Review 4-1 (pg. 2.4-5)
Short-Term Financing and Investing (pg. 2.4-6)
Review 4-2 (pg. 2.4-6)
Basic Entries in General and Special Revenue Funds (pg. 2.4-7)
The Scenario and the Budgets (pg. 2.4-7)
Transactions and Events and Resulting Journal Entries (pg. 2.4-8)
Review 4-3 (pg. 2.4-13)
Fund Financial Statements (pg. 2.4-14)
Review 4-4 (pg. 2.4-16)
Closing the Accounts (pg. 2.4-16)
Review 4-5 (pg. 2.4-17)
Control Accounts and Subsidiary Ledgers (pg. 2.4-17)
Concluding Comments (pg. 2.4-18)
Questions (pg. 2.4-19)
Multiple Choice (pg. 2.4-19)
Exercises (pg. 2.4-22)
Problems (pg. 2.4-24)
Solutions to Chapter 4 In-Chapter Review Questions (pg. 2.4-28)
Chapter 5 General and Special Revenue Funds (Continued) (pg. 2.5-1)
Recognition and Measurement-General Principles (pg. 2.5-3)
Review 5-1 (pg. 2.5-5)
Property Tax Revenues and Receivables (pg. 2.5-6)
Basic Principles and Journal Entries (pg. 2.5-6)
Year-End Adjustments (pg. 2.5-7)
Summary Results, Prior Year Tax Levy, and Subsequent Year Transactions (pg. 2.5-8)
Tax Discounts (pg. 2.5-9)
Interest on Delinquent Taxes and Tax Liens (pg. 2.5-9)
Review 5-2 (pg. 2.5-10)
Sales Tax and Personal Income Tax Revenues and Receivables (pg. 2.5-11)
Intergovernmental Grants and Other Revenues (pg. 2.5-13)
Intergovernmental Grants (pg. 2.5-13)
Fines, Fees, Licenses, and Miscellaneous Revenues (pg. 2.5-15)
Payments in Lieu of Taxes (pg. 2.5-15)
Review 5-3 (pg. 2.5-15)
Expenditures and Fund Liabilities (pg. 2.5-16)
Recognizing Expenditures and Liabilities in Governmental Funds (pg. 2.5-16)
Applying Expenditure Recognition Standards to Specific Transactions and Events (pg. 2.5-17)
Review 5-4 (pg. 2.5-20)
Interfund Transactions (pg. 2.5-20)
Interfund Services Provided and Used (pg. 2.5-20)
Interfund Transfers (pg. 2.5-21)
Interfund Loans (pg. 2.5-22)
Interfund Reimbursements (pg. 2.5-23)
Review 5-5 (pg. 2.5-24)
Other Accounting Matters (pg. 2.5-24)
Acquiring and Disposing of Capital Assets (pg. 2.5-24)
Inventories and Prepayments (pg. 2.5-25)
Warrants (pg. 2.5-27)
Review 5-6 (pg. 2.5-27)
Year-End Financial Statements (pg. 2.5-27)
Statement of Revenues, Expenditures, and Changes in Fund Balance (pg. 2.5-27)
Balance Sheet (pg. 2.5-28)
Review 5-7 (pg. 2.5-28)
Classifications of Fund Balance in the Balance Sheet (pg. 2.5-29)
Effect of Year-End Encumbrances on Fund Balance Classification (pg. 2.5-31)
Review 5-8 (pg. 2.5-32)
GASB Proposed Changes (pg. 2.5-33)
Proposed Governmental Fund Changes (pg. 2.5-33)
Proposed MD&A Changes (pg. 2.5-34)
Proposed Budgetary Comparison Information Changes (pg. 2.5-36)
Implementation Dates (pg. 2.5-36)
Comprehensive Problem on the General Fund (pg. 2.5-36)
The Problem (pg. 2.5-36)
The Solution to the Problem (pg. 2.5-39)
Closing Journal Entries (pg. 2.5-46)
Questions (pg. 2.5-47)
Multiple Choice (pg. 2.5-47)
Exercises (pg. 2.5-50)
Problems (pg. 2.5-53)
Solutions to Chapter 5 In-Chapter Review Questions (pg. 2.5-56)
Chapter 6 Capital Projects Funds, Debt Service Funds, and Permanent Funds (pg. 2.6-1)
Measurement Focus and Basis of Accounting (pg. 2.6-3)
Capital Projects Funds (pg. 2.6-3)
Overview (pg. 2.6-3)
Capital Budgets (pg. 2.6-4)
Summary of Fund Activities (pg. 2.6-5)
Control of Fund Activities (pg. 2.6-5)
Accounting for Fund Activities (pg. 2.6-5)
Financial Statements Illustration (pg. 2.6-10)
Completing the Project: The Following Year (pg. 2.6-10)
Review 6-1 (pg. 2.6-13)
Issuance of Bonds at a Premium or Discount (pg. 2.6-13)
Issuance of Bonds between Interest Payment Dates (pg. 2.6-14)
Arbitrage (pg. 2.6-14)
Review 6-2 (pg. 2.6-16)
Debt Service Funds (pg. 2.6-16)
Overview (pg. 2.6-16)
Types of Government Debt (pg. 2.6-17)
Review 6-3 (pg. 2.6-18)
Summary of Fund Activities (pg. 2.6-19)
Control of Fund Activities (pg. 2.6-19)
Accounting for Fund Activities (pg. 2.6-19)
Financial Statements Illustration (pg. 2.6-23)
Review 6-4 (pg. 2.6-25)
Leased Assets (pg. 2.6-26)
Overview (pg. 2.6-26)
Accounting for Leases in Governmental Funds (pg. 2.6-26)
Review 6-5 (pg. 2.6-27)
Permanent Funds (pg. 2.6-27)
Control of Fund Activities (pg. 2.6-28)
Accounting for Fund Activities (pg. 2.6-28)
Concluding Comment (pg. 2.6-30)
Review 6-6 (pg. 2.6-30)
Questions (pg. 2.6-31)
Multiple Choice (pg. 2.6-31)
Exercises (pg. 2.6-34)
Problems (pg. 2.6-36)
Chapter 6 Case Study-Having Faith in “Full Faith and Credit” Debt (pg. 2.6-41)
Solutions to Chapter 6 In-Chapter Review Questions (pg. 2.6-42)
Chapter 7 Proprietary Type Funds-Enterprise and Internal Service Funds (pg. 2.7-1)
Proprietary Funds Are Governments’ Business-Type Activities (pg. 2.7-3)
Overview (pg. 2.7-3)
Measurement Focus and Basis of Accounting of Proprietary Funds (pg. 2.7-3)
What Determines Whether a Proprietary Fund Is an Enterprise Fund or an Internal Service Fund? (pg. 2.7-4)
Control of Proprietary Fund Activities (pg. 2.7-4)
GAAP for Proprietary Funds (pg. 2.7-4)
Review 7-1 (pg. 2.7-6)
Specific Aspects of Internal Service Funds (pg. 2.7-6)
Overview (pg. 2.7-6)
Control of Internal Service Fund Activities (pg. 2.7-7)
Accounting for Internal Service Fund Activities (pg. 2.7-7)
Reporting Internal Service Funds-Financial Statements Illustration (pg. 2.7-10)
Reporting Internal Service Funds in Combined Financial Statements (pg. 2.7-12)
Review 7-2 (pg. 2.7-14)
Specific Aspects of Enterprise Funds (pg. 2.7-15)
Control of Enterprise Fund Activities (pg. 2.7-15)
Accounting for Enterprise Fund Activities (pg. 2.7-15)
Financial Statements Illustration (pg. 2.7-19)
GASB GAAP Compared to FASB GAAP (pg. 2.7-26)
Why Should GAAP Be Different? (pg. 2.7-26)
Reporting Capital Assets and Their Use (pg. 2.7-27)
Accounting for Leases (pg. 2.7-27)
Capital Asset Impairment (pg. 2.7-29)
Pensions and Other Postemployment Benefits (pg. 2.7-29)
Including Fiduciary Activities (pg. 2.7-30)
Reporting Changes in Net Position versus Comprehensive Income (pg. 2.7-30)
Concluding Comments (pg. 2.7-31)
Review 7-4 (pg. 2.7-31)
Questions (pg. 2.7-31)
Multiple Choice (pg. 2.7-32)
Exercises (pg. 2.7-34)
Problems (pg. 2.7-37)
Solutions to Chapter 7 In-Chapter Review Questions (pg. 2.7-41)
Chapter 8 Fiduciary Funds (pg. 2.8-1)
Overview of Employer Government Pension and OPEB Accounting (pg. 2.8-3)
Defined Benefit and Defined Contribution Plans (pg. 2.8-3)
Pension and OPEB Plans (pg. 2.8-4)
Structure of Plans (pg. 2.8-5)
The Role of Actuaries (pg. 2.8-5)
External and Internal Defined Benefit Plans (pg. 2.8-6)
Computing the Pension and OPEB Liability for Defined Benefit Plans (pg. 2.8-6)
Computing Pension and OPEB Expense and Related Deferrals (pg. 2.8-9)
Computing the Employer Pension and OPEB Liability for Defined Contributions (pg. 2.8-12)
Determining the Pension and OPEB Contribution (pg. 2.8-13)
Pension and OPEB Note Disclosures (pg. 2.8-13)
Review 8-1 (pg. 2.8-13)
Pension Trust Funds (pg. 2.8-14)
Pension Trust Fund Operating Entries (pg. 2.8-14)
Closing Entry (pg. 2.8-17)
Financial Statements Illustration (pg. 2.8-18)
Financial Reporting for Defined Contribution Plans (pg. 2.8-18)
Review 8-2 (pg. 2.8-23)
Investment Trust Funds (pg. 2.8-23)
Fund Overview (pg. 2.8-23)
Summary of Investment Trust Fund Activities (pg. 2.8-24)
Control of Fund Activities (pg. 2.8-24)
Accounting for Investment Trust Fund Activities (pg. 2.8-24)
Financial Statements Illustration (pg. 2.8-27)
Private-Purpose Trust Funds (pg. 2.8-29)
Fund Overview (pg. 2.8-29)
Summary of Private-Purpose Trust Fund Activities (pg. 2.8-29)
Accounting for Private-Purpose Trust Fund Activities (pg. 2.8-29)
Financial Statements Illustration (pg. 2.8-30)
Review 8-3 (pg. 2.8-33)
Custodial Funds (pg. 2.8-33)
Fund Overview (pg. 2.8-33)
Accounting for Custodial Fund Activities (pg. 2.8-34)
Financial Statements Illustration (pg. 2.8-35)
Review 8-4 (pg. 2.8-37)
Questions (pg. 2.8-37)
Multiple Choice (pg. 2.8-38)
Exercises (pg. 2.8-41)
Problems (pg. 2.8-42)
Solutions to Chapter 8 In-Chapter Review Questions (pg. 2.8-45)
Chapter 9 Reporting Principles and Preparation of Fund Financial Statements (pg. 2.9-1)
Overview of Financial Reporting (pg. 2.9-3)
Financial Reporting Objectives and GASB Statement No. 34 (pg. 2.9-3)
Content of the CAFR-an Overview (pg. 2.9-5)
Minimum External Financial Reporting Requirements (pg. 2.9-7)
Review 9-1 (pg. 2.9-7)
The Financial Reporting Entity (pg. 2.9-8)
Defining the Financial Reporting Entity (pg. 2.9-8)
Reporting Component Units in the Reporting Entity’s Financial Statements (pg. 2.9-11)
Related Organizations, Joint Ventures, Jointly Governed Organizations (pg. 2.9-12)
Review 9-2 (pg. 2.9-13)
Preparing Management’s Discussion and Analysis (pg. 2.9-14)
Review 9-3 (pg. 2.9-16)
Preparing Fund Financial Statements (pg. 2.9-16)
General Comments (pg. 2.9-16)
Fund Financial Statements-Governmental Funds (pg. 2.9-18)
Fund Financial Statements-Proprietary Funds (pg. 2.9-23)
Fund Financial Statements-Fiduciary Funds (pg. 2.9-24)
Review 9-4 (pg. 2.9-25)
Preparing Notes to the Financial Statements (pg. 2.9-25)
Significant Accounting Policies (pg. 2.9-26)
Stewardship, Compliance, and Accountability (pg. 2.9-26)
Deposits and Investments (pg. 2.9-26)
Capital Assets and Long-Term Debt (pg. 2.9-28)
Interfund Transfers and Balances (pg. 2.9-28)
Pensions and Other Postemployment Benefits (OPEB) (pg. 2.9-29)
Review 9-5 (pg. 2.9-29)
Preparing Required Supplementary Information (pg. 2.9-30)
Budgetary Comparison Schedules (pg. 2.9-30)
Pension and Other Employee Benefit Information (pg. 2.9-32)
Infrastructure Asset Information (pg. 2.9-33)
Review 9-6 (pg. 2.9-34)
Preparing the Statistical Section (pg. 2.9-34)
Financial Trends (pg. 2.9-35)
Revenue Capacity (pg. 2.9-35)
Debt Capacity (pg. 2.9-35)
Demographic and Economic Information (pg. 2.9-35)
Operating Data (pg. 2.9-35)
Review 9-7 (pg. 2.9-36)
Questions (pg. 2.9-36)
Multiple Choice (pg. 2.9-37)
Exercises (pg. 2.9-40)
Problems (pg. 2.9-43)
Chapter 9 Case Studies (pg. 2.9-44)
Solutions to Chapter 9 In-Chapter Review Questions (pg. 2.9-46)
Chapter 10 Government-Wide Financial Statements (pg. 2.10-1)
Fund Financial Statements are the Starting Point for Government-Wide Statements (pg. 2.10-3)
Focus and Format of Government-Wide Statements (pg. 2.10-3)
The Government-Wide Statement of Net Position (pg. 2.10-4)
The Government-Wide Statement of Activities (pg. 2.10-8)
Review 10-1 (pg. 2.10-12)
Interfund and Internal Service Fund Balances and Activity (pg. 2.10-12)
Interfund Receivables and Payables (pg. 2.10-12)
Review 10-2 (pg. 2.10-14)
Preparing Government-Wide Financial Statements-Overview (pg. 2.10-14)
Process for Preparing Government-Wide Statements (pg. 2.10-14)
Discussion of Adjustments for Government-Wide Statements (pg. 2.10-15)
Review 10-3 (pg. 2.10-16)
Review 10-4 (pg. 2.10-18)
Review 10-5 (pg. 2.10-20)
Creating Government-Wide Financial Statements from Fund Financial Data: Comprehensive Illustration (pg. 2.10-20)
Opening Balances, Transactions, and Events (pg. 2.10-20)
Journal Entries to Record Transactions in Funds (pg. 2.10-21)
Preclosing Trial Balances and Fund Financial Statements (pg. 2.10-23)
Adjustments for Preparing Government-Wide Statements (pg. 2.10-24)
Preparing Government-Wide Financial Statements and Reconciliations (pg. 2.10-27)
Review 10-6 (pg. 2.10-31)
Capital Assets, Including Infrastructure Assets (pg. 2.10-31)
Reporting on Infrastructure Assets (pg. 2.10-32)
Capital Asset Accounting (pg. 2.10-33)
Review 10-7 (pg. 2.10-35)
Questions (pg. 2.10-35)
Multiple Choice (pg. 2.10-35)
Exercises (pg. 2.10-38)
Problems (pg. 2.10-41)
Solutions to Chapter 10 In-Chapter Review Questions (pg. 2.10-44)
Chapter 13 Accounting for Nonprofit Organizations (pg. 2.13-1)
Characteristics of Nonprofit Organizations (pg. 2.13-3)
Source of Accounting and Financial Reporting Guidance for Nonprofits (pg. 2.13-4)
Review 13-1 (pg. 2.13-4)
Financial Reporting for Nonprofits (pg. 2.13-4)
Objectives of Nonprofit Financial Reporting (pg. 2.13-4)
Reporting on Restrictions and Classes of Net Assets (pg. 2.13-5)
Statement of Financial Position or Balance Sheet (pg. 2.13-6)
Statement of Activities (pg. 2.13-8)
Statement of Cash Flows (pg. 2.13-12)
Reporting Expenses by Nature and Function-Statement of Functional Expenses (pg. 2.13-13)
Review 13-2 (pg. 2.13-13)
Contributions Other Than Services and Collections (pg. 2.13-14)
General Rule (pg. 2.13-14)
Unrestricted Contributions (pg. 2.13-14)
Contributions with Donor-Imposed Restrictions (pg. 2.13-14)
Accounting for Reclassifications (pg. 2.13-16)
Unconditional Promises to Give (Pledges) (pg. 2.13-17)
Conditional Promises to Give (pg. 2.13-18)
Review 13-3 (pg. 2.13-19)
Contributed Services and Collection Items (pg. 2.13-19)
Contributed Services (pg. 2.13-19)
Contributions to Collections (pg. 2.13-20)
Review 13-4 (pg. 2.13-22)
Investments and Split-Interest Agreements (pg. 2.13-22)
Fair Value Reporting and Investment Gains and Losses (pg. 2.13-22)
Investment Disclosures (pg. 2.13-24)
Investment Income (pg. 2.13-24)
Split-Interest Agreements (pg. 2.13-24)
Review 13-5 (pg. 2.13-25)
Reporting Exchange Revenues (pg. 2.13-25)
Exchange Transactions and Nonprofits (pg. 2.13-25)
Subscription and Membership Income (pg. 2.13-28)
Depreciation Expense (pg. 2.13-28)
Fundraising Expenses (pg. 2.13-28)
Providing Information about Nonprofit Liquidity (pg. 2.13-29)
Review 13-6 (pg. 2.13-30)
Nonprofit Regulatory Issues (pg. 2.13-30)
Nonprofit Existence, Organization, and Regulation (pg. 2.13-30)
Public Charities and Private Foundations (pg. 2.13-31)
Filing Requirements for IRC 501(c)(3) Organizations (pg. 2.13-31)
Review 13-7 (pg. 2.13-32)
Fund Accounting in Nonprofits (pg. 2.13-33)
Types of Funds (pg. 2.13-33)
Interfund Transfers (pg. 2.13-34)
Interfund Receivables and Payables (pg. 2.13-34)
Illustration Using Funds (pg. 2.13-34)
Review 13-8 (pg. 2.13-40)
Questions (pg. 2.13-41)
Multiple Choice (pg. 2.13-41)
Exercises (pg. 2.13-43)
Problems (pg. 2.13-46)
Solutions to Chapter 13 In-Chapter Review Questions (pg. 2.13-52)
Terry Patton

Terry Patton

Robert Madera Distinguished Professor of Accounting and Chair of the Accounting, Management Information Systems, and Legal Studies Department of the Dillard College of Business Administration at Midwestern State University in Wichita Falls, Texas

He received his bachelor’s degree from Midwestern State University, a master’s degree from the University of North Texas, and a PhD from Texas Tech University. He teaches governmental and nonprofit accounting, as well as auditing. 

Dr. Patton began his career in public accounting, where he audited local governments. Later, he served as a project manager and as the research manager for the Governmental Accounting Standards Board. He has coauthored a governmental accounting book for practitioners, Guide to Governmental Financial Reporting Model: Implementing GASBS No. 34, and another governmental accounting textbook published by Pearson Prentice Hall.

He has published articles in the Accounting Review, Accounting Horizons, the Journal of Accounting and Public Policy, and the Journal of Public Budgeting, Accounting, and Financial Management, among others. Dr. Patton regularly speaks to accounting professionals on state and local governmental accounting topics.

Dr. Patton has served as a board member on numerous nonprofit boards of directors. Currently, he serves on the board of the BBB Serving North Central Texas. He is also a board member and chair of United Regional Healthcare System and the Wichita Falls Alliance for Arts and Culture. 

Susan S. Hamlen

Susan S. Hamlen

Susan S. Hamlen is the former Department Chair and Associate Professor of Accounting at the University at Buffalo School of Management. She received her PhD and MS at Purdue University and her BS at the University of California, Berkeley.

Professor Hamlen is the author of Advanced Accounting 4e and previously co-authored 12 editions of advanced accounting texts. She has taught courses in advanced accounting for over twenty-four years and courses in financial accounting for over nine years, at the undegraduate and graduate levels.

Professor Hamlen's research interests are in the area of reporting for financial derivatives and international reporting. She has publications in Journal of Derivatives Accounting, Theoretical Economics Letters, and in other accounting and analysis journals.

Professor Hamlen is an active member of the American Accounting Association and other accounting, analysis, and business organizations.

Advanced Accounting, 4e (Hamlen)
Errata - Textbook
Last Updated: Mar 31 2020

Corrections that were made to the text after the first printing. 

Excel Templates - Student
Last Updated: Mar 31 2020

Excel spreadsheets for select assignments are provided on the book’s website. These spreadsheets will save time in data entry and allow students to dedicate additional time to learning the material. The Excel spreadsheets are identified by the Excel icon.

Chapters 1-6 and 10 available. Others coming soon!

Practice Quizzes
Last Updated: Mar 31 2020
Practice Quiz Solutions
Last Updated: Mar 31 2020
Accounting for Governmental & Nonprofit Organizations, 2e (Patton, Patton, Waymire)
Last Updated: Aug 10 2021

Corrections to identified errors in the text.

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