Do you agree with the GASB that deferrals are inherently different from other financial statement elements and need to be reported separately as their own elements? Why or why not? Feel free to disagree with the GASB's conclusion on either conceptual or practical grounds.

Main Question: What is the opinion on this student's response? Please see below.

I agree that deferrals should be different from other financial statement elements and reported as their own elements. By reclassifying certain assets and liabilities as deferred outflows and deferred inflows of resources, GASB is able to define the fundamental components of financial position in more detail (Mead, 2007). Separating the consumption and acquisition of net assets applicable for future reporting periods provides the financial statement users with information to assess the interperiod equity making the statements more comparable to other governmental entities. A great example of deferred inflow of resources would be the Service Concession Arrangements (SCAs) in GASB 60, which generates revenue and cashflows. Under an SCA, a transferor would transfer the rights and obligations of infrastructures or public facilities to a legally separate entity or the operator. The operator will then use the asset to provide services and collect fees in exchange for an upfront payment to the transferor (GASB, 2010). In the SCAs, the assets can include parking garages, parking meters, airports, hospitals, and bridges. The upfront payment the transferor receives would be reported as deferred inflows of resources and would be recognized as revenue over the length of the contractual terms. Rather than recognizing the upfront payment as all revenues and increasing the net position, the government can record them throughout the years, which enhances accountability and interperiod equity.