Assignment Type:Individual Project
Deliverable Length:1–2 pages Points Possible:
100 Due...

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Assignment Type:Individual Project 
 Deliverable Length:1–2 pages Points Possible: 
100 Due Date:6/30/2013 11:59:59 PM CT  APA formatted ReferencesTo make sure you are up to date on the special guidelines the GASB has 
declared, your manager asked you to research GASB Statement No. 56. He also 
asked you to show him, side by side, how government accounting journal entries 
might differ from for-profit journal entries in these similar events.

Write 500–750 words that addresses the following:

When was GASB Statement No. 56 initiated?
In your own words, what is the essence of the new ruling?
Why did the GASB probably deem it as being necessary?
How might GASB Statement No. 56 change the activities of any accountant 
performing governmental accounting?
Create journal entries for all of the following situations.

On 10/1/2010, a for-profit Company A provides $100,000 of service to Company 
B. Company B plans to pay their bill 90 days later.

Create the journal entry when the service is provided.
Create the journal entry when the cash is received.
On 12/1/2010, the city's recreation department receives a government grant 
of $100,000 specifically to use for next year's park upgrades, which will begin 
on 1/1/2011.

Create the journal entry made when the cash is received.
Create the journal entry to be made on 1/1/2011.
A for-profit retail store buys $200,000 of inventory on 9/1/2010.

Create the proper journal entry to show purchase of this inventory.

A local city park buys $200,000 of food merchandise for later resale. It 
uses the purchase method to account for inventory.

Create the proper journal entry for when this purchase is made.

A nonprofit organization receives a $250,000 donation on 12/1/2011, but the 
donor specifically wants it spent in 2012.

Create the journal entry or entries to show the proper recording of revenue 
(this may require more than on journal entry).
Create the subsequent journal entry to show spending of the funds.

Please submit your assignment.
The following grading criteria will apply to this 
assignment:

Grading Criteria

5%

When was GASB Statement No. 56 initiated?

15%

In your own words, what is the essence of the new ruling?

10%

Why did the GASB probably deem it as being necessary?

20%

How might GASB Statement No. 56 change the activities of any accountant 
performing governmental accounting?

50%
Create the correct journal entries for all of the given 
situations.

Robert · Accepted Answer

GASB statement no. 56 
GASB is an independent private authority which sets accounting standards for 
government entities. Government accounting standard board statement no. 56 is being issued by 
GASB in March 2009 in order to set generally accepted accounting principle which is being 
followed by state and local government for maintaining their financial records, on the other hand 
financial records of other entities i.e. for profit organizations are maintained as per the standards 
issued by financial accounting standard board i.e. FASB. 
Objective of the GASB before issuing statement no. 56 is to incorporate guidance 
regarding three major issues which were not included in authoritative literature that establishes 
accounting principles. These topics are as follows:- 
 Related party transactions 
 Going concern considerations 
 Subsequent events 
Purpose of this statement is to improve the financial reporting procedure for state and 
local government by applying relevant accounting guidance and codify all generally accepted 
accounting principles for state and local government. In order to reflect the effect of statement 
no. 56 on the financial statements and determining their necessity we have to explain each in 
precise manner, following is the explanation for each of above issues mentioned above:- 
In case of related party transactions the rule of thumb is that “would the transaction, as 
such, have taken place if the parties had not been related?” As per the statement issued by 
GASB state and local government entities must follow substance over form if related parties are 
involved in any particular transaction. In other words if any transaction involves the related 
parties in it than such transaction must be evaluated on two fronts,

Assignment Type: Individual Project Deliverable Length: 1–2 pages Points Possible: 100 Due Date: 6/30/2013 11:59:59 PM CT APA formatted References To make sure you are up to date on the special...

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