Question
The federal government owns a large factory in a municipality. The facility is exempt from property tax assessments. If the facility were held by a
The federal government owns a large factory in a municipality. The facility is exempt from property tax assessments. If the facility were held by a private entity. The assessed property tax would be 500,000. However the federal government has agreed to make an annual payment of 400,000 to the municipality to compensate for the loss of tax collections. The payment is made in the first quarter of each fiscal year.
How should the municipality record the payment from the federal government at the fund level?
A Debit Cash 400,000 Credit revenue 400,000
B Debit receivables 500,000 credit revenue 400,000 and deferred inflow of resources 100,000
C debit cash 400,000 credit interfund transfer 400,000
D debit cash 400,000 and receivables 100,000 credit revenue 500,000
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