The government maintains twelve capital project funds. The funds were established in different years for expenditures capital outlays, for example, acquisition and construction of capital facilities or assets. The projects are marked Capital Project funds in the 2016 report. Of the twelve, none of it is a major capital fund (Canally, Eenoo, & Thomas, 2016).
Austin Texas reports two debt service funds. The two are identified under the heading Debt service funds on page 155. None of them are a significant debt service funds. The two are a general obligation and Hud section 108 loans fund (Canally, Eenoo, & Thomas, 2016).
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The capital projects and debt service funds are reported independently in details from other funds. They are recorded in the combining balance sheet, combining statement of revenues, expenditures, and changes in fund balance, combining schedule of revenues, expenditures, and changes in fund balances budget and actual budget basis (Canally, Eenoo, & Thomas, 2016).
The fund authorized on November 6, 2012, is one of the recently established substantial funds. In 2012, it's total funds approved was $43,081. The fund deals with transportation, parks, open spaces, health, library and culture and public safety. The revenues are derived from intergovernmental, property owners’ participation and contribution and interest. The city acquired and constructed new capital assets (Canally, Eenoo, & Thomas, 2016).
The city acquired new capital assets using the fund. Some of the investments and the amounts include; Library 13,818 park improvement 92, parks and recreation 2,738, colony park 2144. No direct long term can be associated with the fund even though there are several debts that that were intended to undertake projects within this fund (Canally, Eenoo, & Thomas, 2016).
The government issued additional long-term debt to finance some of its activities within the year. The repaid some of the debts but the majority had long repayment periods, and therefore it will continue paying every year for the entire amount including interest. The government did not engage in any in-substance defeasances. In the fund's statement, the government reports debt assessment debts only. There are no assessment receivables in the annual report for Austin (Canally, Eenoo, & Thomas, 2016).
Continuing problem chapter 7
The capital assets for the city include equipment, building, and improvement, electric and nonelectric plant, vehicles water rights, nuclear fuel, construction in progress, land, infrastructure, and plant held for future use. The total number of capital assets added during the year was $352.8 million. There was an increase of 3.8% for governmental activities while business-type activities recorded 3.3% increase. The total capital assets retired were $192.489 million (Canally, Eenoo, & Thomas, 2016).
Capital assets that are purchased, constructed or internally generated are capitalized at historical costs. Improvements that extend the useful life of a capital asset or increase its value will be capitalized in the government-wide and proprietary statement of position. Any capital asset that is contributed or annexed is recorded at the historical fair value at the period when it is received. An asset is regarded as a capital asset if their initial cost is $5000 or more and has an estimated useful life of more than one year (Canally, Eenoo, & Thomas, 2016).
The government charged $115,964 million in its statement as depreciation for capital assets used in its activities. From the annual report, the government capitalized infrastructure assets acquired during the year. However, there are no records for the same in the previous years. The Government also capitalized arts and treasures. Such collections are not depreciated because; their real value is expected to be maintained over time (Canally, Eenoo, & Thomas, 2016).
The city has some investments that appeared to be risky. The investments had more than five percent of the portfolio balance in securities. The securities belonged to Federal Farm credit bank at 11%, federal home loan bank 12% federal home loan Mortgage Corporation 11% and federal National Mortgage association 10%. Exposure to interest rate risk is high for Auxin as a result of the interest rates charged (Canally, Eenoo, & Thomas, 2016).
The government owns derivatives in two hedging programs which are energy risk and variable rate debt management. The city reports the fair value of all derivatives on the balance sheet. Derivatives are recorded as either hedging derivatives instruments or investment derivatives. The city uses fair value measurement. It enters into options, swaps, futures contracts, congestion revenue rights to reduce exposure to price risks. The contracts are either settled in cash or delivered in the form of commodities. The city typically pays the contracts in cash. The report contains a detail explanation of the transactions in two sections (Canally, Eenoo, & Thomas, 2016).
Reference
Canally, G., Eenoo, E. V., & Thomas, D. (2016). City of Austin Texas: Comprehensive Annual Financial Report (Rep.). Austin: City of Austin Texas.
