Wiley GAAP for Governments 2013: Interpretation and Application of Generally Accepted Accounting Principles for State and Local Governments

CHAPTER 20

NONEXCHANGE TRANSACTIONS

Classes of Nonexchange Transactions

Accounting and Financial Reporting Requirements

Accrual-basis requirements

Modified accrual basis

Property Taxes

Income and Sales Taxes, and Other Derived Tax Revenues

Adjustments for the Accrual Basis of Accounting

Grants and Other Financial Assistance

What financial assistance should be recorded?

Revenue recognition of grants and other financial assistance

Expenditure-driven grants and other financial assistance revenue

Practice Issues

The term nonexchange transaction has only recently gained wide use in government accounting and financial reporting, so governmental financial statement preparers may at first think that this chapter will not have broad applicability.

However, once it is understood that taxes are nonexchange transactions, it becomes clear that nonexchange transactions include accounting and financial reporting requirements for a significant part of a governmental entity’s typical transactions.

GASB Statement 33, Accounting and Financial Reporting for Nonexchange Transactions (GASBS 33), divides all transactions into two categories.

1. Exchange transactions, in which each party to a transaction receives and gives up something of essentially the same value

2. Nonexchange transactions, in which a government gives or receives value without directly receiving or giving something equal in value in the exchange

As will be more fully described below, nonexchange transactions therefore include very ...