Question
Discussion Kale County has operated a popular municipal golf course for more than 25 years. Local patrons as well as tourists enjoy the course and
Discussion
Kale County has operated a popular municipal golf course for more than 25 years. Local patrons as well as tourists enjoy the course and its reasonable rates. Several years ago, the course was quite profitable, so the county created an enterprise fund and moved accounting for the golf operations from the General Fund to the new enterprise fund. Over the years, however, the course usage has declined and costs have increased. During the current year, the course suffered a $560,895 shortfall that had to be covered by the county's General Fund.
In the upcoming fiscal year, the county projects the shortfall to be more than $800,000. Many have criticized the county for injecting money into a business that should be primarily funded through user charges. Supporters of the golf course note the municipal course is part of the Department of Parks and Recreation, which benefits the entire community, hence county support of the course is warranted.
Is the Kale County golf course required to be accounted for as an enterprise fund? What are the accounting implications of operating the golf course as of a General Fund department rather than an Enterprise Fund activity?
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