Governmental Revenue Recognition Sale of Assets | Permits and Licences Revenues | CPA exam FAR
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Like businesses, governments can take advantage of capital asset accounting to improve the look of their financial statements even in the absence of substantive fiscal improvement. Thus, in its government-wide statements a government can recognize a gain and a corresponding increase in net position by selling a capital asset having a market value greater than its book value. In its governmental fund statements it can report both “other financing sources” and a corresponding increase in fund balance by selling any capital asset, irrespective of the relationship between its book and market values.
activities over a specified period of time. However, the license period may not coincide with the government’s fiscal year. The primary concern relating to licenses is whether the revenue should be recognized when a license is issued and cash is received (usually concurrently), or whether it should be spread out over the period covered by the license. In other words, is the significant economic event the col- lection of cash or is it the passage of time? The issue is by no means clear-cut in light of the following characteristics of licenses: • Some license fees are intended to cover the cost of services provided to the licensee or related to the activity in which the licensee engages. These license fees have the characteristics of exchange transactions. The licensee pays cash and receives value in exchange. For example, the funds generated from restaurant licenses may be used to inspect restaurants, thereby ensuring customers that the restaurants meet minimum standards of cleanliness. Similarly, bicycle registration fees may support bicycle safety programs. Other fees, however, may bear little relation to the cost of services provided and may be imposed mainly as a source of gen- eral revenue. They are more in the nature of nonexchange revenues. • Generally, license fees are not refundable. Therefore, unless a license fee is tied to specific ser- vices, once the government receives the fee it has no further obligation—actual or contingent— to the licensee.
Government revenue recognition for license and permit, government sale of accounting, governmental accounting
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Like businesses, governments can take advantage of capital asset accounting to improve the look of their financial statements even in the absence of substantive fiscal improvement. Thus, in its government-wide statements a government can recognize a gain and a corresponding increase in net position by selling a capital asset having a market value greater than its book value. In its governmental fund statements it can report both “other financing sources” and a corresponding increase in fund balance by selling any capital asset, irrespective of the relationship between its book and market values.
activities over a specified period of time. However, the license period may not coincide with the government’s fiscal year. The primary concern relating to licenses is whether the revenue should be recognized when a license is issued and cash is received (usually concurrently), or whether it should be spread out over the period covered by the license. In other words, is the significant economic event the col- lection of cash or is it the passage of time? The issue is by no means clear-cut in light of the following characteristics of licenses: • Some license fees are intended to cover the cost of services provided to the licensee or related to the activity in which the licensee engages. These license fees have the characteristics of exchange transactions. The licensee pays cash and receives value in exchange. For example, the funds generated from restaurant licenses may be used to inspect restaurants, thereby ensuring customers that the restaurants meet minimum standards of cleanliness. Similarly, bicycle registration fees may support bicycle safety programs. Other fees, however, may bear little relation to the cost of services provided and may be imposed mainly as a source of gen- eral revenue. They are more in the nature of nonexchange revenues. • Generally, license fees are not refundable. Therefore, unless a license fee is tied to specific ser- vices, once the government receives the fee it has no further obligation—actual or contingent— to the licensee.
Government revenue recognition for license and permit, government sale of accounting, governmental accounting
7 سال پیش
در تاریخ 1396/04/06 منتشر شده
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