On the same date the state announced a $10 million grant to another school district for the acquisition of equipment.
On the same date the state announced a $10 million grant to another school district for the acquisition of equipment. However, per the provisions of this grant the state will make payments only upon receiving documentation from the district that it has incurred allowable costs. In fiscal 2013, the district incurred and documented allowable costs of $8 million. Of this, the state paid only $7 million, expecting to reimburse the district for the balance early in fiscal 2014.
a. Prepare the journal entries that the state would make in fiscal 2013 to record the awards in an appropriate governmental fund. Briefly justify the amount of expenditure that you recognized.
b. What, if any, adjustment to the amount of expenditure recognized would the state have to make in preparing its government-wide statements?
c. Describe briefly how the recipients would account, in both fund and government-wide statements for the awards.