1). The city of Peoria offers a company relief from $2 million per year in property taxes if the company sets up a new plant in Peoria. The company opens the plant. What should the financial statements show, if anything, related to the taxes that the company does not pay?

Nothing, because there is no money coming in

A disclosure of the nature and amount of the tax abatement, but no adjustment to recorded numbers

A disclosure of the nature and amount of the abatement. Peoria would also show $2 million more of tax revenue, and a tax expenditure of $2 million on its financial statements.

A tax expenditure of $2 million on its financial statements. No disclosure is necessary.

2).

Which of the following statements is most correct regarding GASB rules for how government report their roads and other infrastructure in government-wide financial statements?

		They must report spending on a cash basis. No asset is recorded, and no depreciation is booked.
		They must record the cost of the infrastructure as an asset, and they must report depreciation
		They must record the cost of the infrastructure as an asset, but they can never report depreciation
		They must record the cost of the infrastructure as an asset, and they have an option of whether or not to report depreciation. 3). Peoria has a June 30 year end. On June 1, Fiscal Year 1, it sent out property tax bills that relate to Year 2. It collected $500,000 in June of Fiscal Year 1, 25,000,000 between July 1, Fiscal Year 2, and June 30, Fiscal Year 2, $400,000 in July, Year 3, $300,000 in August, Year 3, $200,000 in September, Year 3, and expected to eventually collect another $250,000. Under the modified accrual method, the property tax revenue it should report for Fiscal Year 2 is: $25,000,000 $25,500,000 $26,200,000 $26,400,000 $26,650,000