GASB Statement 34 and Reporting of Expenditures is a document that establishes current financial reporting for the United States' government (Granof & Khumawala, 2013, p. 280). According to statement No. 34 in the GASB standard, the government does not charge depreciation on infrastructure assets. The content of the new document will comprise new information. This document will answer the following questions based on the GASB Statement 34 and Reporting of Expenditures: Although Statement No. 34 requires that infrastructure assets be accounted for similarly to other capital assets, it allows for a major exception regarding depreciation. What is that exception? And, A government's interest expenditure as reported in its debt service fund differs significantly from its interest expense, as reported in its government-wide statements. What is the most likely explanation for the difference?
Exception in Depreciation
The first question is based on a concern that rules out depreciation infrastructure as stated in statement No.34. The exception is if the government has the ability to show that they are incurring costs in maintaining the assets. For the government to adopt the approach there is specific condition it must meet. If the government manages to meet the condition, it is allowed to report maintenance expenses in its wide statement for qualifying assets. This condition applies to all the qualifying assets unless the assets require some improvements. It is also worth noting that the government is solely responsible for setting the condition level that measures assets (Granof & Khumawala, 2013, p. 280).
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Interest Recognition
The second question is meant to provide an explanation of the difference that exists between debt service fund and government-wide statements: regarding interest recognition. One of the major difference is based on the two methods in which the two statements are presented (Granof & Khumawala, 2013, p. 280). The debt service funds are usually prepared on an accrual statement. On the other hand, government-wide statement is mostly focused on financial statements. This means that aspects such as interests accrued from long-term conditions are not recognized until the due date. In a government-wide statement, interest can be comfortably accrued any time to recognize the expense regardless of the due date.
Conclusion
The above two questions speculate different aspects of government accounting. The government is responsible for managing infrastructures. Such unique assets require modification on its spending. The two statement recognizes interest very differently. However, a user with both statements can be able to picture the economic cost especially for long-term obligations (Granof & Khumawala, 2013, p.279).
References
Granof, M. H. & Amp; Khumawala, S. B. (2013). Government and not-for- profit accounting:
Concepts and practices (6 th ed.). Hoboken, NJ: John Wiley & Sons, Inc.
