Concept explainers
Indicate when an item should recognize on the financial statements under GASB and when a note disclosure should accompany an item that is recognized on the statements.
Explanation of Solution
Government Accounting Standards Board (GASB): Government accounting standards board (GASB) is an independent board that makes accounting reporting standards for the local and state government of Country U, which follows generally accepted accounting principles (GAAP).
According to GASB guideline, an item should recognize on the financial statements in the following two conditions:
- If the item meets the definition of an element.
- If the item is measured with adequate reliability to record.
A note disclosure should accompany an item that is recognized on the statements if the note provides necessary information about item to the users.
For example, if there is an item such as long-term debts on the financial statements, then the essential information such as schedule of payments, types of debt, and interest on debt should provide as a note disclosure on the statements.
Want to see more full solutions like this?
Chapter 2 Solutions
Accounting For Governmental & Nonprofit Entities
- Discuss the circumstances that require a contingent liability to be disclosed in the notes to the financial statements.arrow_forward1. Explain the purpose of operational accountability and the purpose of fiscal accountability. Which category of financial statements is most useful in reporting on each of these accountability concepts? 2. Under GASB guidance, when should an item be recognized on the face of the financial statements? Under what conditions would the GASB indicate that a note disclosure should accompany an item that has been recognized on the financial statements?arrow_forwardWhat are the general steps involved in filing a registration statement with the SEC?arrow_forward
- The primary reason for preparing a reconciliation between interest-bearing obligations outstanding during the year and interest expense in the financial statements is toa. Evaluate internal control over securities.b. Determine the validity of prepaid interest expense.c. Ascertain the reasonableness of imputed interest.d. Detect unrecorded liabilities.arrow_forwardHow much should be disclosed in the notes to the financial statements as "compensation expense" in accordance with IAS 24, Related Party Disclosures?arrow_forwardWhat is an asset and liability per the IASB framework definition for the preparation and presentation of financial statement?arrow_forward
- How can a misstatement in one financial statement, whether intentional or not, affect a presentation in another financial statement?arrow_forwardWhat are some of the reasons in support of financial reporting regulations?arrow_forwardFor each class of financial assets and liabilities, the entity shall disclose the fair value of that class of financial assets and liabilities in a manner that allows comparison with the corresponding carrying amount on the balance sheet. Why do you think that these disclosures contribute to improving the quality of information for users of financial statements? Comment criticallyarrow_forward
- Auditing: A Risk Based-Approach to Conducting a Q...AccountingISBN:9781305080577Author:Karla M Johnstone, Audrey A. Gramling, Larry E. RittenbergPublisher:South-Western College PubBusiness/Professional Ethics Directors/Executives...AccountingISBN:9781337485913Author:BROOKSPublisher:CengageAuditing: A Risk Based-Approach (MindTap Course L...AccountingISBN:9781337619455Author:Karla M Johnstone, Audrey A. Gramling, Larry E. RittenbergPublisher:Cengage Learning
- Intermediate Accounting: Reporting And AnalysisAccountingISBN:9781337788281Author:James M. Wahlen, Jefferson P. Jones, Donald PagachPublisher:Cengage Learning