Could we please have a solution for Government and Not for profit accounting 5th

Question

Could we please have a solution for Government and Not for profit accounting 5th edition (by Michael H Granof and Saleha B. Khumawala), chapter 11 exercise 3(E.11-3)?

Thank you

Governments must apply the criteria of GASB Statement No. 14 in determining wbether and how to include an associated entity in its reporting entity. ts A city is considering whether and how it should include following associated organizations in its reporting the entity. Its school system, although not a legally separate gov- ernment, is managed by a school board elected by city residents. The system is financed with general tax rev- enues of the city, and its budget is incorporated into that of the city at large (and thereby is subject to the same approval and appropriation process as other city 1. as expenditures). Its capital asset financing authority is a legally sepa- rate government that leases equipment to the city. To finance the equipment, the authority issues bonds that are guaranteed by the city and expected to be paid from 2.

Explanation / Answer

The following table highlights the treatment that should be given to each type of associated entity:

S.No. Associated Entity Name Treatment 1 School System Will not be treated as a separate legal entity. Will be reported in a similar way as other city departments. 2 Capital Asset Financing Authority Will be reported as a component unit (as services are provided by the authority exclusively to the city) using the “Blended Method”. 3 Housing Authority Will be reported as a component unit under the city's reporting entity as city is financially supporting the authority. It will not be reported with the use of blending methodology but would be reported discretely. It is because the services are provided to the residents of the city and not to the city directly, the governing boards of which are different. 4 Hospital Will be reported under the enterprise fund as the hospital is managed by a private firm. 5 Water Purification System Will be reported under the enterprise fund as the city’s interest in the plant was acquired with use of resources from its water utility (enterprise) fund. 6 Community College Will not be reported under the city's reporting entity as it is a separate legal entity with everything independent of the city.

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