A citys visitors bureau, which promotes tourism and conventions, is funded by an 8 percent local hotel
Question:
1. In light of the city’s fiscal problems, what is the most likely motivation for the new charge? Will the new overhead charge achieve its objective?
2. What would be the impact of the new charge on the city’s annual fund financial statements, prepared in accordance with GAAP (which requires that the city account for its governmental funds on a modified accrual basis)? Would the impact be the same if the city accounted for its governmental funds on a cash basis?
3. What would be the impact of the new charge on the city’s government-wide statements, in which all governmental funds are consolidated? Would it have an impact on reported net position?
4. In what way might the charge have a substantive impact on the city’s economic condition?
5. Assuming that the city provided accounting, legal, and purchasing services to the visitors’ bureau, do you think the charge would be consistent with the statutory requirement that the hotel occupancy tax be used to meet only ‘‘direct expenditures’’ related to tourism and use of the convention center (an issue not addressed in this text)?
GAAP
Generally Accepted Accounting Principles (GAAP) is the accounting standard adopted by the U.S. Securities and Exchange Commission (SEC). While the SEC previously stated that it intends to move from U.S. GAAP to the International Financial Reporting Standards (IFRS), the...
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Related Book For
Government and Not for Profit Accounting Concepts and Practices
ISBN: 978-1118155974
6th edition
Authors: Michael H. Granof, Saleha B. Khumawala
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