[FutureCPA123]

Hi, I am stuck on this question:

A government has the following debt:

Capital lease liabilities that mature in more than one year (General Fund department leases)-$2,000,000.
Net pension liability associated with general government employees-$4,000,000.
General government bonds that mature in the next fiscal year-$14,000,000.
What amount of debt should be reported in the long-term liabilities in the government-wide financial positions?

A. $2,000,000
B. $6,000,000
C. $18,000,000
D. $20,000,000

Why is it D. $20 million? I thought net pension liability is a fiduciary fund. Also, wouldn’t the general governmental bonds of $14 million be current…? I selected A. I know that Governmental-Wide is only Government & Business activities. I’ve read the ‘Unmatured long-term debt’ section too and I’m still confused.

[Shannon]

In the Governmental Funds chapter, page 19, Long Term debt – long term liabilities include unmatured principal of bonds, and pensions (which is a noncurrent liability).

Long term liability – Capital lease liabilities that mature in more than one year

Long term (noncurrent) liability – Net pension liability associated with general government employees

Long term liability (due to being “unmatured” – still considered long term) – General government bonds that mature in the next fiscal year

In the Governmental Reporting chapter, page 38, it has a Governmental-Wide Statement of Net Position example which shows “Long Term Liabilities” to include those due within one year.

[DocJ]

“I thought net pension liability is a fiduciary fund.”

True, the Pension Fund is Fiduciary, but it's still technically a liability. You still gotta pay that stuff out to your employees.

“wouldn't the general governmental bonds of $14 million be current”

Just guessing here, but my understanding is that bonds are always non-current. They have current and non-current portions, but as long as there's any non-current portion, then it falls under non-current. Also, the way it's worded seems like it could be interpreted as long term. It said the bonds mature NEXT year, not this year.

[Author]

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