General Fund and Leasing in Government Accounting - Essay Example

GENERAL FUND AND LEASING IN GOVERNMENT ACCOUNTING Revenue of the general fund = $6,720,000 4% of $6,720,000= $268, 800 Revenues =6,720,000- 268800= $6, 451, 200General FundGovernmental activitiesProperty taxes receivables $6,720,000Allowance for uncollectible tax $268, 800Revenues $6, 451, 200Property taxes receivables $6,720,000Allowance for uncollectible tax $268, 800Revenues $6, 451, 2002. How to determine whether a particular lease is a capital lease or an operating leaseThe differences between capital lease and an operating lease is based on several considerations which include accounting, tax treatment, term of the lease and ownership.

Under accounting, the capital lease is treated as an asset if the property is leased and as a liability for lease payments which are indicated in the balance sheet. In an operating lease, the payments are regarded as operating expenses which are recorded in the profit and loss statement (Ruppel, 2010). In the tax treatment, the lessee under a capital lease is taken to be the owner of the property and therefore can claim depreciation as well as interest expenses. In the case of an operating lease the lessee is regarded to be the one renting the property hence all the lease payments are regarded as rent expenses (Fischer et. al, 2008).

Under capital lease, ownership is usually transferred to lessee at the end of a lease term and they are further responsible for the insurance as well as repair and maintenance of the property. On the other hand, ownership of the leased property is usually retained by the owning firm at the end of the lease term. The term of the lease under capital lease usually equals or exceeds 75% of the useful life of an asset as estimated while under an operating lease, the term of the lease is normally less than 75% of the useful life of an asset (Fischer et. al, 2012).

Entries required in the general journals of a government fund and governmental activities at the government-wide level to record a capital lease at its inceptionThe entries required in the general journals of a government fund and government activities at the government-wide level to record a capital lease at its inception is as shown below.General government fund Dr CrDue from Federal government XXXRevenues XXXGovernment ActivitiesDue from Federal government XXXCapital Grants and Contributions XXXReferencesCrawford, Michael A.

, & Loyd, D. Scot. (2008). Governmental GAAP Guide 2009. Cch Inc.Fischer, P. M., Taylor, W. J., & Cheng, R. H. (2008). Fundamentals of advanced accounting. Mason, OH: Thomson/South-Western.Fischer, P. M., Taylor, W. J., & Cheng, R. H. (2012). Advanced accounting. Mason, OH: South-Western Cengage Learning.Ruppel, W. (2010). Governmental accounting made easy. Hoboken, N.J: Wiley.