March 7, 2020 at 11:07 am #2956460FutureCPA123Participant
Hi, I am stuck on this question:
A government has the following debt:
Capital lease liabilities that mature in more than one year (General Fund department leases)-$2,000,000.
Net pension liability associated with general government employees-$4,000,000.
General government bonds that mature in the next fiscal year-$14,000,000.
What amount of debt should be reported in the long-term liabilities in the government-wide financial positions?
Why is it D. $20 million? I thought net pension liability is a fiduciary fund. Also, wouldn't the general governmental bonds of $14 million be current…? I selected A. I know that Governmental-Wide is only Government & Business activities. I've read the ‘Unmatured long-term debt' section too and I'm still confused.March 7, 2020 at 5:43 pm #2956742ShannonParticipant
In the Governmental Funds chapter, page 19, Long Term debt – long term liabilities include unmatured principal of bonds, and pensions (which is a noncurrent liability).
Long term liability – Capital lease liabilities that mature in more than one year
Long term (noncurrent) liability – Net pension liability associated with general government employees
Long term liability (due to being “unmatured” – still considered long term) – General government bonds that mature in the next fiscal year
In the Governmental Reporting chapter, page 38, it has a Governmental-Wide Statement of Net Position example which shows “Long Term Liabilities” to include those due within one year.March 7, 2020 at 6:04 pm #2956778DocJParticipant
“I thought net pension liability is a fiduciary fund.”
True, the Pension Fund is Fiduciary, but it's still technically a liability. You still gotta pay that stuff out to your employees.
“wouldn't the general governmental bonds of $14 million be current”
Just guessing here, but my understanding is that bonds are always non-current. They have current and non-current portions, but as long as there's any non-current portion, then it falls under non-current. Also, the way it's worded seems like it could be interpreted as long term. It said the bonds mature NEXT year, not this year.