Government and Not For Profit Accounting: Concepts and Practices, 6th Edition

LEARNING OBJECTIVES

After studying this chapter you should understand:

• Why information on long-term debt is important to statement users
• The significance of bankruptcy in a governmental and not-for-profit context
• Why and how governments account for long-term obligations in both fund and government-wide statements
• The nature of demand bonds, bond anticipation notes, tax anticipation notes, and revenue anticipation notes, and how they should be accounted for and reported
• The reasons governments lease assets and how leases are accounted for and reported
• Why governments issue revenue bonds
• What is meant by overlapping debt and how it is computed
• What is meant by conduit debt and how it is accounted for and reported
• The significance of other types of information that users want about debt—including credit enhancements, debt margin, payout schedules, reserve funds, and key ratios
• The role of rating agencies

This chapter is directed to long-term obligations, including liabilities, such as bonds, that are accorded balance sheet recognition; and other commitments, such as loan guarantees, that may be disclosed only in notes. Liabilities may be interpreted as negative long-lived assets. They present comparable issues of valuation and reporting and, for the most part, are accounted for as mirror images of their asset counterparts, which were discussed in Chapter 7. Governments exclude ...