P. 4-3

Nonexchange revenues can be of four types. The GASB has identified four classes of nonexchange revenues: Derived tax Imposed Government mandated Voluntary

For each of the following revenue transactions affecting a city, identify the class in which the revenue falls and prepare an appropriate fund journal entry for the current year (2018) as necessary. Provide a brief expla- nation of, or justification for, your entry.

1.In December, the state in which the city is located announced that it would grant the city $20 million to bring certain public facilities into compliance with the states recently enacted disability/accessibility laws. As of year-end the city had not yet received the funds, and it had not yet expended any funds on the state-mandated facility improvements.

2.The city imposes a $100 tax on each sale of real estate. The tax is collected by the title companies that pro- cess the sales and must be forwarded to the city within 30 days of the transaction. In December there were 600 sales of real estate. As of year-end the city had collected $40,000 of the $60,000 that it was owed.

3.In December the state announced that the citys share of state assistance for the calendar year 2019 would be $120 million.

4.The city imposes a tax on all boats owned by residents. The tax is equal to 1 percent of the assessed value of a boat (determined by the city, taking into account the boats original cost and age). The tax is payable on the last day of the year prior to the year for which the tax is applicable. In 2018 the city levied $640,000 of 2019 boat taxes, of which it collected $450,000.

5.A local resident sends to the city a copy of her will in which she bequeaths $3 million to the city museum upon her death.

6.The U.S. Department of Justice announces that it will reimburse the city up to $400,000 for the pur- chase of telecommunications equipment. As of year-end the city had incurred only $200,000 in allow- able expenditures.

7.A resident donates $10 million in securities to the city to support a cultural center. Only the income from the securities, not the principal, can be spent.