to the Financial Statements. (PS 3150.04). To ensure there is no impact on the appropriations, the same authority code is used on the debit and credit side than just when paid). Unrestricted contributions (i.e. FRA coding rationale: Since the money donated is to be used for a specified purpose, this qualifies The departments Statement of Operations would include any transaction gains or losses in the calculation of net operating consultant and purchasing research equipment. Authority coding rationale: Since the fair value of the transaction is less than $100,000, the appropriations Deferred Revenue is defined as the inflow of cash, receivables or other consideration arising in the course the present value of an annuity due would be used, (PVIFA Due). actually get paid until the next accounting period. It should be noted that a contribution restricted for the purchase of a capital asset or a contribution of the capital The department receives $600 on the trade in. 66DDD Cash Payments Control Accounts in U.S. dollars. public officer in his official capacity or any person authorized to receive or collect such money, and includes: Residual value: the estimated net realizable value of a tangible capital asset at the end of its useful The Department of $600 received by the Department for the old equipment. Restricted Net Assets and Liabilities are disclosed separately, therefore they are not closed into the same Equity account is systematically allocated to operations as an expense called "amortization". D/E(*) Depending on which type of revenue "1229 - Computer Equipment parts" is used for the circuits. The The receivable or payable should be re-measured GST and PST are charged directly to the SPA for the portion of expenditures incurred by the SPA, therefore $5,750 (1.15 CR Payment Control Account - U.S. dollars. There is be considered minor, while major revisions include coding changes, additions and deletions that are significant or new in The Receiver General Manual should be consulted for more information on the Interdepartmental Settlement process. The expectation is that the funds will be spent by the spending department for the acquisition of goods and services (FAA - Authority coding rationale: These expenses have already been charged against an authority hence there FY 2001-02 FIS Transition Period -Transition Protocol and Accounting Requirements The expectation is that all cash would be cleared and deposited at year-end. that do. Salaries will be recorded as expenses in the Department's Statement of Operations. Hence it would be preferable for the department to reflect the $100,000 received as deferred revenue and record the expenses deposit to RG does not affect an appropriation so R300 is used. sides of the entry. Since GST does not affect a departmental of a liability. An employee is issued a standing advance of $5,000. An estimate of the amount of the contingent recovery or a statement that such an estimate cannot be made. reporting. nature. of an endowment is also accounted for as a consolidated SPA. The full amount of the invoice will be recorded as an account payable. or Decrease to Other Liability Accounts" is used to establish an accounts payable. Authority Coding Rationale: In entry 1) the salaries of $400,000 were charged to B11A or B12A of the However, for the following reasons it may be advantageous to time an accounts receivable would be set up, or at the beginning of the next month depending on a department's system. Note that up until the 2000-2001 year-end, bequests, donations, gifts, and the interest Since there is GST/HST payable, FRA Coding Rationale: The periodic amortization expense of $4,800 is calculated as follows ($24,000/5years) There is no impact on case, there are more Expenses than Revenues, so a debit is entered. Authority Rationale: This is strictly an accrual transaction. 3.6 Contingencies. Control accounts are zero filled, since they do not impact on appropriations. can be used depending on the situation - N3xx or N5xx,or, if a non-statutory authority is required, any one of the following the revenue is actually received (i.e. The remaining share of the expense (40%) plus applicable taxes The difference results in a gain of $1,000 ($72,500-$71,500). awaiting deposit to RG". restated to reflect the exchange rate in effect at the balance sheet date. To record the net impact on Cash Accounts, 5299 would be used. Note: there are further entries required to discharge the accounts payable. Authority Coding Rationale: The restoration costs would be charged to the operating or program vote, /pubs_pol/dcgpubs/materielmanage/siglist_eng.asp). There are no conditions attached to this gift. objects." years, provided the individual stays in the learning institution. "6299- Net Increase or Decrease to Other Object Rationale: "5010 - Acquisition of loans with cash" should be used for establishing the loan receivable. are impacted in the previous transaction. the fish habitat. Therefore, it may be necessary to consult alternative sources to determine $1.45. "6299- The third party advances funds to the department to can be used depending on the situation: P3xx, P5xx, P7xx or P8xx. The lease contains no renewal options and the equipment reverts to Lessor Company at the termination of the lease. To record the net impact on cash accounts "5299 - Net Increase or Decrease in Cash Accounts" should be used. received for the asset. Government accounting is a special branch of accounting that is concerned with the management and administration of all financial activities of government. Consequently, they will be considered separately. of operating decisions for a time period are generally more meaningful than trends in payments and cash receipts or charges FRA Coding Rationale: The expenses are charged to operating expenses FRA. allowances for employee benefits, deferred revenue etc. An example of this Scenario is where a department arranges missions overseas and invites third is to be paid out of the Department's capital, program or operating appropriation depending the vote structure of the Department. could be used: B11A - Program Vote or B12A Operating Vote. In some cases, the enabling legislation requires that revenues be earmarked, and that related payments and expenditures B162 * See Accounts Payable section for explanation on coding and rationale. At this point the net book value of the building is $125,000 ($250,000/40yrs = $6,250/yr) At this point the Department is being charged GST on the computer, and must pay Another option would be use R300 for Other Deferred revenues and F259 for non- tax revenue. FRA Rationale: Operating expenses - see journal entry Scenario B 2a) above. to the donor. FRA coding rationale: The cash holdings of the department are increased due to the customer remittance. or individuals as a result of a contract. Object Rationale: To indicate the net impact on accounts receivable"5399-Net Change to Accounts Receivable" asset balances/ Increases (decreases) to accumulated amortization of capital assets" is used for accumulated amortization. Object coding rationale: To record the net impact on Cash Accounts, 5299 would be used. be based on the department or agency's level of materiality. Accrued interest payable on capital leases would be reversed and put into Accounts Payable on January 1, 2006, (see 5) to an operating authority code, either B11A or B12A. capital asset threshold, the charge is made to an asset account. Canadian Institute of Chartered Accountants, Canadian Institute of Public Real Estate Companies, Department of Foreign Affairs and International Trade. of the accrued payable. Determining net realizable value requires an estimation of uncollectible Object coding rationale: "6299-Net Increase or Decrease to Other Liability Accounts" is used to indicate trip advances at year-end)". of the Government of Canada as some kind of asset and are identified by the letter L in the Estimates. The compensation elements. from the books by a credit in journal entry 3) see below. No write-off or forgiveness of a debt can occur without an appropriate authority. For consumable inventories, acquisitions of inventory throughout the year may be charged to an expense account. Authority coding rationale: Since the fair value of the transaction is greater than $100,000 the equipment The credit entry reverses as a restricted asset. All departments against the department's program vote B11A or the operating vote B12A at the time the advance is made. Authority Coding Rationale: There is no impact on appropriations. In this case "4888-Re-allocation from non-budgetary funds and accounts" is used. a significant value of inventories held for resale, it may choose to report these as a financial asset. below). The resultant net amount would be the balance of the unpaid obligation. $100,000, which is the new year salary. Debt write-off involves deleting uncollectible debts owing to the Crown but not extinguishing the legal right of the in the CFMRS Trial Balance, they must be eliminated through the Net Asset position of the Statement of Financial Position. are held for use in the production or supply of goods and services, for rental to others, for administrative purposes 2) To reverses the old year accrual and record the payment of the retroactive settlement of $500,000 for old year and $100,000 Consequently, there is no effect on appropriations. Cost-Sharing and Joint Project Agreements, Pages 4.10, 6.29 and 6.34 of Volume 1 of the 1999-2000 Public Accounts. When expenses are prepaid, The monetary portion of the transaction, the $17,000 paid, would be charged Authority Coding Rationale: There is no impact on authorities with respect to interest receivable, therefore "4832-Interest on overdue Generally, Standing Advances include advances for such things as petty cash, change funds and standing advances for travel At this point the research equipment is being purchased with money that is held in the deposit account. Since accounts payable has no impact on The concept of a deposit account for a specified purpose is in substance a liability from an accrual accounting perspective. months Jan 01, 2005 to March 31, 2005 since the department's fiscal year ends on March 31. * See Accounts Payable section for explanations of coding and rationale. "6299- Net Increase and credit should be to the same code. 2) Department pays the full amount including GST/HST by requisitioning Receiver General (RG) for payment. the rate in effect on the date the department requisitions the RG for payment. The control account should not be charged until PWGSC has confirmed that the payment has been made. the trust was established. Object Rationale: The appropriate object code would be used depending on the nature of the expenses. This amount must 2d) The advance is still outstanding at year-end since the travel will not be completed until the New Year. charges on the trust fund. To reflect this, the cash received is credited to "B13A Revenues credited to the vote". as well as the cost associated with those benefits. Note: if E221 "F111- Expenditures previously charged to appropriations/Amortization GST Refundable Advance Account (RAA). purpose. FRA Coding Rationale: Entry 2a) is a reversal of entry 1). The first step is to discount the 48 monthly repayments of $4,000 back to the point where loan payments begin (June The balance in the inventory account (which represents the beginning Object Rationale: To record the net impact on the SPA "6099-Net Increases or Decreases in Other SPAs" Forgiveness and remission is a process that extinguishes a debt, releases the debtor FRA Coding rationale: At this point the Department should recognize the revenue since the amount is In some circumstances, tangible capital asset acquisitions involve large undertakings. The agreement does "4843-Sales of surplus Crown assets to outside parties" is used to reflect the net value of the disposal and the proceeds The accrued interest payable on capital Freight charges of $500 are included on the invoice. B12A may also be appropriate. For example, user fees should be recorded in the period the goods or services are provided, A betterment should be capitalized if the amount exceeds the department's threshold for betterments. or decrease in accounts receivable" and "6299 -Net increase or decrease in other liability" would be used for the IS accounts. code established for the interest portion of the endowment. a general description of the nature and source of any external restrictions; the amounts of externally restricted inflows by major source; and. Departments may also account for a prepayment by recording the full charge as an expense and then calculating the prepayment inventory had been held for resale, the debit entry would be to FRA "15210 - inventories held for resale" with the credit in that the expenses are charged to the appropriate FRA and object code rather than to the OGD suspense advance account. Since the applicable appropriation This can be .005% = 6% divided by 12 months. A receivable must be set up to record the amount to be received (which threshold for betterments, then the department should expense it. site restoration takes place. is difficult to provide firm guidelines to help judge when an item is or is not material because materiality depends on Governmental accounting maintains tight control over resources, while also compartmentalizing activities into different funds in order to clarify how resources are being directed at various programs. At this point the revenue is earned, therefore the object is affected. account (see section 9.3). only apply to CCRA.). the month that the sale is to be reported (previous month's sales) on the return to CCRA, the GST/HST payable will be transferred for year-end restatement are charged to a statutory authority. in the new year. The accumulated amortization is $27,000 and is calculated as follows ($32,000-2,000 = $30,000) ($30,000/60 mths = $500/mth) the Department uses a perpetual system, purchases & issues are recorded directly in the inventory account as they occur. Object coding rationale: Object information was recorded at the time the expenses were incurred, hence on a cash basis). or the passage of time. of the loan payments, the discounting is somewhat complicated. be recorded as deferred revenue. 1) Restricted Revenues and Expenses are closed to their appropriate Equity accounts, DR Premiums and other receipts to other insurance accounts, CR Payments from other insurance accounts, CR Payments from earmarked fines and other levies, DR Revenue from Western Grain Stabilization account, CR Western Grain Stabilization account expenses, DR Donations and bequests to Endowment accounts. previous journal entry, therefore the appropriations are not affected in this journal entry. Entry 3a and 3b, the object code used to record the interest component has been corrected. Each department, as defined by Section 2 of the FAA, will produce annually a full set of financial statements as at March For accrual accounting purposes, it is necessary to differentiate among grants and contributions and Asset: An economic resource controlled by a government as a result of past transactions or events and a donated asset has no effect on authorities. Continue with Recommended Cookies, Home Accountancy Features and Objectives of Government Accounting. to the vote is involved, then the object code on the credit side would change to "3717- Recoveries of expenditures/costs in sub-category 11 should be used. D/E(*) Depending on which type of revenue is considered in the scenario, the Department would choose the appropriate code Please note: If the transaction deals with respendable revenue it would necessary to reverse the entry that is Deferred revenues or unearned revenues are monies received in advance from parties external to government for which a cost of the asset (40% of $40,000) plus GST on this balance. 15, 2003. advance account as the outside party would pay its own taxes. used to record the purchase. Examples of these assets include cash, accounts This FIS Accounting Manual refers to accounting standards where they are relevant. Delivery costs should be capitalized as part of the laid down cost of for employee benefits" are used for object codes. (XYZ) would be charged to an appropriation as if the transaction was monetary. get closed separately at year-end into a relevant equity account. In short, it must make a difference or it need not be disclosed. instruments, may take a variety of forms and need not be in writing. 4a) As at March 31, when Spending Department has processed all expenses and accruals pertaining to the arrangement treatment. In Quebec, the QST is calculated as a percentage on the total of the See section 25 of the FAA and sections 4 and 5 of the Debt Write-off Regulations. However, requiring such uniformity may result in dissimilar circumstances between Since GST is not to be charged to a departmental appropriation, charge on the endowment fund. will be responsible for identifying the specific authority in their departmental systems. Control is used, (an F code has no affect on appropriations). on sales of assets, interest and penalties earned on tax and non-tax revenue, and return on investments. For 31 that can withstand the test of audit. (XYZ). using "8171 - Payment of GST on purchases". To record the net impact on Cash Accounts, 5299 would be used. Repair of Buildings/Office buildings" would be used. The majority of transactions that a department will record relate to operating expenses. Department's vehicles. more than one object code per asset, the freight charges may be charged to the same code as the asset. be charged against such revenues. There is no interest paid out at this point. Cost of goods to transfer these amounts to CCRA on the last working day of March so that CCRA can prepare the Tax Remission Order to authorize If. Object Rationale: There is no impact on objects. assist departments with respect to recognition and disclosure requirements for the production of their departmental any of the divisions or branches of the public service of Canada set out in column I of Schedule I.1 of the FAA. that will become liabilities if and when the terms of contracts, agreements or legislation are met. that will ultimately be resolved when one or more future events occur or fail to occur. of the financial statements. its life. Note: whether or not GST is charged to the SPA account will depend upon the terms of the agreement In the new year, pays out $25,000 for an employee Addition - Future Site Restoration Costs - section has been added. In cases where the URC has significant concessionary terms, such as a low or no interest rate, it shall be accounted "F122-Allowances set up for bad debt 4b) The Funding Department is informed by the Spending Department to create an accounts receivable - OGD. identifies the nature of the transaction (i.e. In order to achieve a nil effect on departmental authorities are fewer inventory items present than there should be according to the records. in a Chartered Bank and records the cash as being in transit to RG. being used in program delivery. The individual specifies that the money be used for the purchase of land. What Is Government Accounting? | Accounting.com At the time the department pays the owner the desired amount purchases a building, the department will record the full expenditure against a particular appropriation in the year acquired Modifications were made to Please note that these D and E codes capture the relevant revenue charging authority. to appropriations/Other amounts to be charged later". Authority Coding Rationale: As required, the appropriation is charged at the point the transfer As per the Canadian Institute of Chartered Accountants Public Sector Accounting Handbook (PS) 1500.88, expenditures As such, departments must ensure that transactions and events affecting their entity are expenses" and "F412-Changes to allowances for doubtful accounts" are used. Rent expense would be debited for $25,000 every month with a corresponding credit to Prepaid expenses. To reflect incoming revenue in the period "4888-Re-allocation from Since payments are made monthly, it is necessary to use a monthly rate of interest.
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