[rlg5150]

A capital projects fund for a new city courthouse recorded a receivable of $300,000 for a state grant and a $450,000 transfer from the general fund. What amount should be reported as revenue by the capital projects fund?

I was under the impression that a state grant is recorded as deferred revenue until spent but the answer to this question is actually $300,000. Shouldn’t it be $0?

FAR - 85
AUD - 86
BEC - 84
REG - 88

[WantToBeDone]

Grants are classified as revenue.

BEC - 80
AUD - 85
FAR - 76
REG - 75

[Lidis]

According to the Ninja

Government revenue recognition

It is available?

Is it measurable?

If yes – it's revenue, regardless of when it is spent

The capital project fund use modified accrual accounting. (not accrual)

[rlg5150]

Wow. Just looked at my book again and it specifically says that grants for capital project funds are recorded as deferred revenue until spent on the project. It says they are a liabilty because they must be given back if not spent on the project. What the heck..

FAR - 85
AUD - 86
BEC - 84
REG - 88

[Anonymous]

@rlg5150 – I'm almost guessing here, so please don't yell at me if I'm way off base, but I do have some real world experience with governmental grants. The problem asked what was revenue to the Capital Projects Fund. Could this be a Due To/Due From situation? So the Capital Projects Fund would report Revenue from the Grant, but the General Fund would report a liability? Like I said I'm not sure about this. I have a client that got a DEQ grant that was for sewer improvements but the grant funds had to be deposited into the General Fund. It was a nightmare keeping up with all of it but I think we did Due To/Due From on all of the deposits and payments to contractors. The Capital Projects Fund ended up with a zero balance at the end and I had to budget the grant money in the General Fund. I hope this doesn't confuse the issue even further. Good Luck!

[jdj017400]

Becker F8-43 states that:

Capital grants received in advance are often recorded as a liability and displayed as earned as they are expended.

Government grants may be restricted and are reported as “revenues” when earned (ie. spent; eg. grant money expended by recipient fund), OR may be unrestricted and recognized immediately.

Unrestricted = Revenue

Restricted = Deferred Revenue

So maybe the question is referring to an Unrestricted grant….thoughts anyone?

BEC - 80 (11/30/2010), Lost Credit - Retake 11/30/2012, 80 (FINISHED!)
AUD - 71 (05/31/2011), 79 (08/28/2011)
REG - 70 (11/30/2011), 87 (02/09/2012)
FAR - 61 (5/31/2012), 80 (08/31/2012)

[rlg5150]

@jdj017400

That's pretty much what my Bisk book says except that it specifially gives state grants as an example of being restricted.

FAR - 85
AUD - 86
BEC - 84
REG - 88

[Author]

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