Capital Projects Funds Chapter 7 Learning Objectives Understand nature of and when to use Capital Projects Funds (CPFs) Understand typical CPF financing sources, how many CPFs are required, and life cycle of CPF Determine costs to be charged to CPF
GASB requires that bonds be recorded at face value. Premiums (Other Financing Source), discounts (Other Financing Use), and bond issue costs (Expenditure – Debt Service) must be accounted for separately. Also, the bond is accounted for in the General Long-Term Liabilities accounts.
Supplemental order for fuel and materials for project – over and above the cost of the contract.
The State Grant is obviously not expenditure-driven – that is why it was all received up front. The funding from the General Fund (GF) may be received all at once or at various times, as is the case here.
Use worksheet to create pro forma closing entries which aren’t posted to accounts
Financial statements prepared from worksheet – just like normal
Use same routine as used in earlier chapters
Closing entries typically result in artificial deficits
Appropriated fund balance reported for unexpended amountsOptions for Closing Entries
Reverse some of adjusting/closing entries made in previous year – gets budgetary accounts back in balance
Reasons for use
Recall that as a result of this event, the Bonds Payable will be recorded in the General Long-Term Liabilities accounts.
At the same time the BAN principal will be removed from the General Long-Term Liabilities accounts.
The difference in the amount earned on investing bond proceeds and amount paid in interest on the bonds – since most governments issue tax-exempt debt, this amount can be significant.