Wiley GAAP for Governments 2020

5CAPITAL PROJECTS FUNDS

• Introduction
• Basis of Accounting
• Measurement Focus
• When are Capital Projects Funds Used?
• Revenues and other Financing Sources
  • Proceeds from Debt Issuance
    • Basic journal entries to record the issuance of debt
  • Bond Anticipation Notes
  • Demand Bonds
  • Special Assessment Debt
    • Government obligation for special assessment debt
  • Arbitrage Rebate Accounting
• Summary

INTRODUCTION

Governments often use the capital projects fund type to account for and report major capital acquisition and construction activities. GASBS 54, Fund Balance Reporting and Governmental Fund Definitions, provides that capital projects funds should be used to “…account for and report financial resources that are restricted, committed, or assigned to expenditure for capital outlays, including the acquisition of construction of capital facilities and other capital assets.” GASBS 54 further provides that capital projects funds should exclude those types of capital related outflows financed by proprietary funds or for assets that will be held in trust for individuals, private organizations, or other governments.

BASIS OF ACCOUNTING

As a governmental fund type, capital projects funds use the modified accrual basis of accounting. Revenues are recorded when they are susceptible to accrual (that is, they are accrued when they become measurable and available). Expenditures are recorded when the liability is incurred. The expenditure recognition exceptions (inventories, prepaid items, judgments ...