In 2015, Plumeria City issued 10 year bonds on behalf of Dragonfly, a not-for-profit organization aimed at improving health in the city. In 2022, Dragonfly files for bankruptcy as a result of a large, unexpected, increase in staffing costs due to the COVID-19 pandemic. At what point will Plumeria City recognize a liability for the debt held by Dragonfly that was part of the conduit debt arrangement. When Plumeria City has legally assumed the debt of Dragonfly, most likely after the bankruptcy proceeding have been completed When it is more likely than not that Plumeria City will have to pay the debt of Dragonfly. The liability was already recognized in the financial statements of the City at the time the debt was issued in 2015. O Plumeria City will not ever recognize Dragonfly's debt. By definition, conduit debt never becomes the liability of the governmental entity that issued the debt.