week 6b 1 answer below »

Problem # 1

Durham Township has two component units that it is required to include in its reporting entity. The ?rst, a housing authority, maintains two funds: a general fund and a special revenue fund. The second, a transportation authority, has but one fund: an enterprise fund. The township itself has only a general fund.

The fund balance sheets, in highly condensed form, of all three entities are shown below (in millions). Also presented, as appropriate, are capital assets and long-term obligations that are not recognized on the fund statements, since the statements are on a modi?ed accrual basis.

1. Assume that both component units qualify for discretepresentation. On its government-wide statements, thetownship elects to combine the two units into a singlecolumn.

a. Prepare a government-wide statement of net assets(on a full accrual basis) that presents both the township and its component units.

b. Commentonthesigni?canceofthecolumninwhichthe two component units are presented

2. Suppose instead that the town is required to blend thetwo component units.

a. Prepare a government-wide statement of net assets.Be sure to show the transportation authority as business-type activity.

b. If the township were to prepare fund statements,how would it report the housing authority’s specialrevenue fund? How would it report its general fund?

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