In producing government-wide financial statements, major general infrastructure assets (even those that were previously not reported)

must now be included even if an estimation of the book value at the end of the current year must be made. However, to limit the difficulty of this process, only major general infrastructure assets acquired or significantly improved since June 30, 1980, must be included. Coming up with figures for construction prior to that time is simply viewed as too difficult. The sidewalk was built in 1977 so that capitalization is not required.

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question 18
The City of Southpark is in the process of producing government-wide financial statements. Over three decades ago, in 1977, the city built a major sidewalk system through the town. This system has not been significantly improved since the initial construction. Based on the accounting guidelines that were appropriate at the time, this infrastructure was not recorded as an asset by city. Cost figures are no longer available. In preparing government-wide financial statements for the current year, what reporting should be made for this major sidewalk system?

A The city is not required to make any reporting at the current time. B The original cost of the sidewalk must be reported as an asset. C An estimation of the book value of the sidewalk must be made and reported as an asset. D The fair value of the sidewalk must be determined and reported as an asset.

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In producing government-wide financial statements, major general infrastructure assets (even those that were previously not reported) must now be included even if an estimation of the book value at the end of the current year has to be made. To limit the difficulty of this process, only major general infrastructure assets acquired or significantly improved since June 30, 1980, must be included. Because the sidewalk was built in 1987, capitalization is now required. In its authoritative literature, GASB provides several acceptable methods that can be used to determine an appropriate net book value for an infrastructure asset such as this sidewalk.

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question 19

The City of North Park is in the process of producing government-wide financial statements. Over two decades ago, in 1987, the city built a major sidewalk system through the town. This system has not been significantly improved since the initial construction. Based on the accounting guidelines that were appropriate at the time, this infrastructure was not recorded as an asset by city. Cost figures are no longer available. In preparing government-wide financial statements for the current year, what reporting should be made for this major sidewalk system?

A The city is not required to make any reporting at the current time. B The original cost of the sidewalk must be reported as an asset. C An estimation of the book value of the sidewalk must be made and reported as an asset. D The fair value of the sidewalk must be determined and reported as an asset.

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The purchases method, the consumption method, and the use of an Expenditures account are all only relevant to the recording of governmental funds within the fundbased financial statements. Government-wide financial statements are produced in much the same manner as those reported by for-profit organizations. Consequently, the $2,000 use of the asset is properly reported as an expense.

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question 20
The fire department for the City of Lost Angels buys $10,000 in supplies late in Year One. By the end of that year, $2,000 has been used with the remaining $8,000 still on hand. In preparing government-wide financial statements, what recording is appropriate for the Year One statements?

A City officials can choose to use either the purchases method or the consumption method to record the acquisition and use of these supplies. B The $10,000 cost is recorded as an expenditure. C The $2,000 usage is recorded as an expenditure. D The $2,000 usage must be recorded as an expense. A derived tax revenue is one where a tax is assessed on an underlying exchange. An event takes place and a tax is assessed. The best examples are income taxes and sales taxes.

For a state or local government, an imposed nonexchange revenue is any tax that is assessed where there is no underlying transaction. Property taxes (real estate and personal property taxes) are"by far" the best known examples. Fines and penalties assessed by the government also fall into this category. A government-mandated nonexchange transaction is one where grants or other monies are conveyed from one government to another to help cover the cost of legally required programs or actions. Which qualifies as a voluntary nonexchange transaction? A voluntary nonexchange transaction covers all money freely conveyed to a government by individuals, organizations, or other governments unless it must be used to cover the cost of a legally required program. Thus, A is the answer here because no legal requirement is being met rather than B (which is an example of a government-mandated nonexchange transaction).

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For government-wide financial statements, derived tax revenues such as sales taxes and income taxes are recognized when the underlying event takes place. The sale was made during Year One and should be recorded at that time. The amount will be collected within 12 months and, thus, is a current receivable. The 60-day disclosure only relates to the reporting appropriate for the fund-based financial statements and not the government-wide financial statements which are reported much like a for-profit business.

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question 25
The City of Saint Francis assesses a sales tax on all sales made during the period of over $10,000. On December 21, Year One, a sale of $80,000 occurs that will require a payment to the government of $3,200. The payment is expected on March 15, Year Two. The notes to the financial statements indicate that assets (such as receivables and investments) are viewed as current financial resources if they will be collected within 60 days. On government-wide financial statements prepared for December 31, Year One and the year then ended, how should this derived tax revenue be reported?

A As a current receivable of $3,200 and revenue of $3,200

According to the authoritative literature, the receivable for an imposed nonexchange revenue is not reported until there is an enforceable legal claim. Until that time, the government is only requesting possible early payment. However, the date of an enforceable legal claim can vary significantly across the country based on the laws of the jurisdiction.

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question 26
Late in Year One, the City of Robert assessed its property taxes for Year Two. The tax bills were mailed out in December so that the citizens could make payments early if they wished. In preparing its financial statements (government-wide or fund-based) when should the city report the receivable for this imposed nonexchange revenue?

A When the tax is assessed B When the tax bills are mailed C When there is an enforceable legal claim D On the first day of Year Two The revenue from an imposed nonexchange revenue is recognized in the period in which use will be made of the money that is received. Thus, recognition is made in the time period when the resulting resources are required to be used or in the first period in which use is permitted. It is likely that the property tax revenue for Year Two will be recognized at the beginning of Year Two but that is not always correct; the timing depends on the wording of the law as to when use is required or permitted.

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question 27
Late in Year One, the City of Bobb assessed its property taxes for Year Two. The tax bills were mailed out in December so that the citizens could make payments early if they wished. In preparing its government-wide financial statements, when should the city report the revenue for this imposed nonexchange revenue?

A When the tax bills are mailed to the owners B When there is an enforceable legal claim C On the first day when use is permitted D On the first day of Year Two The correct answer was B.

For an imposed nonexchange transaction such as this, revenues are recognized in the period when they are required to be used or in the first period in which use is permitted (depending on the wording of the law). Here, use of this money is required in Year Two so that the revenue should be recognized in Year Two. Until that time, the amount that has been received is reported as deferred revenue. On the first day of Year Two, the deferred revenue should be reclassified as revenue. For both government-mandated nonexchange transactions as well as voluntary nonexchange transactions, revenue is recognized when all eligibility requirements have been satisfied. The assumption is that the award remains uncertain until the eligibility requirements are fulfilled.

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question 29
The City of Manchester receives a $2 million grant from the state government to help implement a program that has been legally required by the state legislature. Thus, this money comes from a government-mandated nonexchange transaction. When should the city report this revenue in its financial statements?

A When the grant is awarded B What all eligibility requirements have been met C When the money is received D When the money is spent

This transfer is between two governmental funds. On government-wide statements, the governmental funds are grouped together within the category of governmental activities. Thus, the transfer causes no changes in any of the overall balances being reported for the governmental activities so that reporting is not necessary. Transfers such as this that are solely between governmental funds or solely between enterprise funds are referred to as intra-activity transactions. On the fund-based financial statements, where the funds are reported individually, the general fund reports an other financing use while the capital projects fund reports an other financing source.

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question 30

During the current year, city officials for the Town of West View transferred $230,000 from the general fund into a capital projects fund. On its government-wide financial statements, how is this transfer reported on the statement of activities?

A It is not shown

This transfer is between a governmental activity (the general fund) and a business-type activity (the enterprise fund) and is referred to as an interactivity transaction. The governmental activity is now smaller while the business-activity has grown. Thus, a transfer-out is reported by the governmental activities and a transfer-in is reported by the business-type activities. In the column for the government as a whole, the two balances offset so that no figure is reported.

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question 31
During the current year, city officials for the City of South Corner transferred $70,000 as short-term financing for the city's bus line. Because the bus line provides its service to the public for a fee, the money went from the general fund into an enterprise fund. On its government-wide financial statements, how is this transfer reported on the statement of activities?

A It is not shown B As an other financing source and an other financing use C As a transfer-in and a transfer-out

Because work is actually being done by one fund for the other, this money is not viewed as a transfer but rather as an internal exchange transaction. As such, in the governmentwide financial statements, the information is recorded as if the transaction had occurred with an outside party. Payments to use the toll road are recorded by the enterprise fund as revenue. Payments to use the toll road are recorded by the general fund as an expense (or expenditure for the fund-based financial statements).

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question 32
In the government for the City of Jefferson, the toll road is operated as an enterprise fund since it can be used by the public for a fee. The police department (which is reported within the general fund) pays a monthly fee of $2,000 so that its officers can use the toll road for free. On government-wide financial statements, how is this fee between the two funds reported?

A It is an intra-activity transaction and is not reported by either fund. B It is an interactivity transaction and is recorded as a transfer out (by the general fund) and a transfer-in (by the enterprise fund). C It is recorded as an other financing use (by the general fund) and an other financing source (by the enterprise fund). D It is recorded as revenue (by the enterprise fund) and expense (by the general fund).

Rather than study the issue of lease accounting in depth, the Governmental Accounting Standards Board (GASB) decided to adopt the four criteria that had been used for several decades in financial accounting. If any one of those four criteria is met, the lease must be viewed as a capital lease.

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question 33
The City of Mountain Lake leases a small plane for 5 years to be used by officials whenever necessary. In preparing its financial statements for this year, the city's accountant is attempting to ascertain if this is a capital lease. How is that determination made?

A The same four criteria used in financial accounting are used in accounting for state and local governments.

Government-wide financial statements are prepared in much the same way as the statements produced by for-profit organizations. Therefore, this capital lease is reported by the city in exactly the same manner as is appropriate for a for-profit organization. The plane is capitalized at its present value of $96,000 and then depreciated over the sixyear life of the lease at the rate of $16,000 per year. Interest expense is also recorded on the liability. The beginning balance of $96,000 is immediately reduced by the initial payment of $20,000 to $76,000 so that interest for the first year is $7,600 ($76,000 times 10 percent). Expenditures are only reported in the fund-based financial statements created for the governmental funds.

question 34
On January 1, Year One, the City of Mountain View leases a small plane for 6 years (its entire life) to be used by officials whenever necessary. Payments are $20,000 per year with the first payment made immediately. The present value of these payments at a reasonable interest rate of 10 percent is $96,000. Which of the following is reported on government-wide financial statements for Year One?

A Interest expense of $9,600 B Depreciation expense of $16,000 For government-wide financial statements, a liability of $90,000 ($900,000 times 10 percent) is recognized at the end of Year One. A liability of $220,000 ($1 million times 22 percent) is recognized at the end of Year Two. Adjusting the liability from $90,000 to $220,000 requires the recognition of an expense of $130,000.

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question 35
The Town of Drexel operates a solid waste landfill for its citizens. There is no user fee so the operations of this facility are recorded in the general fund rather than as an enterprise fund. It is assumed that the landfill will take ten years to fill completely. At the end of the first year of operations, the estimated current cost of eventually closing and maintaining this landfill is $900,000. It is 10 percent filled at that point in time. At the end of the second year, the estimated current cost of eventually closing and maintaining this landfill is $1 million. It is 22 percent filled at that point in time. In government-wide financial statements prepared at the end of Year Two, which of the following is true?

A An expense of $130,000 should be recognized. B An expense of $120,000 should be recognized. C An expense of $110,000 should be recognized. D An expense of $100,000 should be recognized.

If three criteria are met, then the government has the option of recording an art work or historical treasure as either an asset or expense. If any of the criteria is not met, the cost (or fair value if received by donation) must be recorded as an asset. The criteria are: (a) the item has to be held for public exhibition, education, or research as a public service, (b) it is protected, cared for, and preserved, and (c) a policy has to be in place requiring the proceeds from any future sale to be used to acquire other items for the government's collection.

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If an art work or historical treasure is received or bought, it may be recorded as either an asset or expense depending on whether certain criteria are met. However, regardless of whether it is reported as an asset or an expense, receipt must be reported in the government-wide financial statements as revenue if obtained through a donation.

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question 37
A citizen of the Town of Morganville donates a piece of art work valued at $600,000 to the government. On its government-wide financial statements, how should the receipt of this donation be reported?

A It is not recorded. B It is not recorded unless the art work qualifies as an asset. C It is not recorded unless the art work qualifies as an expense. D It is recorded as revenue Government-wide financial statements are constructed in a manner similar to the statements of a for-profit organization. A building is depreciated when it is owned and operated by a for-profit organization. The same is true for the government-wide financial statements produced by a state or local government. The modified approach can be used so that depreciation is not required but that approach only applies to infrastructure assets such as roads or sidewalks. Depreciation is recorded

A bridge is viewed as an infrastructure asset because it is stationary and can be preserved for a significantly greater number of years than most capital assets. However, depreciation is still required of all infrastructure assets unless the modified approach has been adopted. Under the modified approach, a minimum acceptable condition level is established and documentation is maintained to show that the asset is kept at or above that level. As long as this level is continued, depreciation is not required for the infrastructure asset.

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question 39
The City of Calton constructs a large bridge on January 1, Year One. The city is now preparing its government-wide financial statements. Which of the following statements is true?

A Depreciation will not be recorded on this bridge in the government-wide financial statements. B If the bridge is viewed as part of the governmental activities, depreciation will not be recorded in the government-wide financial statements. C Depreciation is required in the government-wide financial statements. D Depreciation is required in the government-wide financial statements unless the modified approach has been adopted for the bridge.

General purpose financial statements have three distinct sections: the management's discussion and analysis, the financial statements, and required supplemental information. The management's discussion and analysis is intended as a verbal explanation of the figures and other critical information included within the financial statements.

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question 40
The City of Hot Shores is preparing general purpose financial statements that contain government-wide financial statements and fund-based financial statements. Which of the following statement is true about the management's discussion and analysis (MD & A)?

A Must be included as part of the notes to these financial statements. B Must be included along with the financial statements but is separate from them.

Because of the complexity of the relationships within a government, some system needed to be designed to enable determination of what was part of a government and what was a separate government. For example, some school systems have characteristics much like that of a government. The authoritative literature specifies that any government activity will be judged a special purpose government if (a) it has a separately elected governing body, (b) it is legally independent so that it can sue and be sued and buy and sell property in its own name, and (c) be fiscally independent of all other governments. Hiring and firing decisions are not included within those criteria.

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question 41
The City of Lennon is preparing general purpose financial statements for Year One. The question has arisen as to whether the school system should be viewed as a primary government so that separate financial statements are appropriate. The school system will be required to produce its own financial statements if all of the following are met except?

A The school system has a separately elected governing body from the city. B The school system has corporate powers so that it is legally independent from the city. C The school system is able to make its own hiring and firing decisions without approval of city officials. A component unit is an activity that is legally separate from a primary government (such as the city) but still closely tied to the government. This attachment is demonstrated if the separate organization is fiscally dependent on the primary government (as it is here) or if the primary government appoints a majority of the separate organization's governing board and can impose its will on that board or expects a financial benefit or burden from the separate organization.

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question 42
Within the City of Starr, a municipal airport is operated. The airport is legally separate from the city. However, the airport is fiscally dependent on the city. Airport officials cannot adopt a budget or set usage rates without city approval. In preparing financial statements for the City of Starr, what view is taken of the airport?

A It is a component unit.

Any activity, agency, or the like that qualifies as a component unit of a primary government must be included in the financial information prepared for that government. Most frequently, the information is discretely presented in a separate column on the far right side of each of the government-wide financial statements. However, especially if the relationship of the organizations is intertwined, the financial information of the component unit can be blended with the primary government just as if it were a legal part of that government.

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question 43
The County of Treadway is currently preparing its government-wide financial statements. The public airport is legally separate from the county but is viewed as a component unit because the county appoints a majority of the airport commission and has guaranteed the debts of the airport. In the countys financial statements, how is the information for the airport included?

A The airport's financial information must be included within the business-type activities of the county because it is open to the public but charges a user fee. B The airport's financial information has to be discretely presented on the government-wide statements or can be blended as if it were an actual part of the county. In government-wide financial statements, the reporting is divided into governmental activities and business-type activities. A third category is included for the government as a whole. However, one or more legally separate activities may also be identified that are so closely connected to the government that they qualify as component units (based on specific criteria). These component units can be blended in with the rest of the government's activities. However, it is more typical that the financial information for component units be discretely presented at the far right side of the government-wide financial statements which gives the fourth column found here.

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The City of Jones is preparing its government-wide financial statements and is in the process of producing its statement of net assets. Originally, this statement was to have three columns. However, officials have now decided that a fourth column is appropriate. What is the most likely reason for the inclusion of this fourth column? A Officials have decided that a legally separate activity qualifies as a component unit that will be discretely presented.

Property taxes are classified for financial reporting purposes as an imposed nonexchange revenue. As such, the receivable is recognized when an enforceable claim has been achieved based on applicable law. That was in Year One so the remaining receivable appears as an asset. The revenue, though, cannot be recognized until the period in which the money is required to be spent (or the first period in which use is allowed). So, the assessment is reported as deferred revenue until the first day of Year Two even though a portion has already been collected.

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question 45
Officials for the City of Hauthorne assess property taxes and mail out bills on September 15, Year One for $10 million. According to local law, the city has an enforceable claim for this money and expects to collect it all. The first $2 million is collected prior to the end of Year One and the remainder is collected during Year Two. The assessments were made to cover Year Two expenditures and, legally, cannot be spent until the beginning of that year. In preparing government-wide financial statements for Year One, which of the following statements is true in connection with these property taxes? A No receivable is reported but revenue of $2 million is recognized. B A receivable of $8 million is reported but no revenue is recognized. A school system is not a local or state government (known as general purpose governments) in a traditional sense. It does not have geographic boundaries and does not provide services such as police and fire protection generally associated with such governments. However, because this school system meets several requirements, it is judged to be a special-purpose government that must follow state and local government financial reporting rules. This school system has a separately elected governing body; it is legally independent; and it is fiscally independent. Therefore, separate financial statements should be produced for the school system of the County of Valdese.

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The school system in the County of Valdese has a publicly-elected school board that controls all operating and financial decisions for the schools. This school board has the authority to issue bonds to finance construction of its school buildings and can assess a property tax to pay for these bonds and all related interest. All equipment and other capital assets are acquired in the name of the school system and its school board. For financial reporting purposes, which of the following statements is true? B The school system should report its own financial statements as a specialpurpose government.

On the statement of activities, the net expense or the net revenue resulting from each separate function or program is reported by netting the direct expense of each activity with any program revenues that it generated. Here, the school system earned program revenues of $320,000 but had direct expenses of $9 million. The school provides a net burden of $8,680,000 that must be paid for in some manner by the population as a whole through general revenues such as property taxes, income taxes, and sales taxes.

question 47
The City of Bernini operates its school system within a special revenue fund. During Year One, the schools collect $320,000 in fees from students for books and the like. The school system also has direct expenses of $9 million. The city collects property taxes of $10 million that are used to finance the school system. In producing government-wide financial statements, what is reported on the statement of activities as the net expense or the net revenue created by the school system?

A $1,320,000 net revenue B $1,000,000 net revenue C $9,000,000 net expense D $8,680,000 net expense Program revenues are generated by an individual activity and can come from fines, fees, grants, and the like. The inflow is tied to the actual program. General revenues come from the population in general and have no direct connection with any specific function, program, or activity. Property taxes, sales taxes, and income taxes are all examples of general revenues.

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question 48
The City of Lennox operates its school system within a special revenue fund. During Year One, the schools collect $470,000 in fees from students for books and the like. The school system also has direct expenses of $11 million to educate the students. The city collects property taxes of $12 million with this money used to finance the operations of the school system. In preparing a statement of activities within the government-wide financial statements, which of the following statements is true?

A Both the $470,000 and the $12 million are reported as general revenues. B Both the $470,000 and the $12 million are reported as program revenues. C The $470,000 is reported as a general revenue whereas the $12 million is reported as a program revenue. D The $470,000 is reported as a program revenue whereas the $12 million is reported as a general revenue.

The government-wide financial statements report all economic resources. Therefore, whether the warehouse is part of a governmental fund or an enterprise fund, it is reported as an asset in the government-wide financial statements. On fund-based financial statements, the proprietary funds (including enterprise funds) also report all economic resources. It is only the fund-based financial statements for the governmental funds that measure and report just current financial resources. For those statements, the warehouse would have originally been recorded as an expenditure with no capitalized amount shown.

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question 49
Mr. Jones picks up the general purpose financial statements for the City of Manchester. Mr. Jones sees a warehouse in the records with a cost of $3.7 million and accumulated depreciation of $740,000 for a book value of $2,960,000. Which of the following statements is not true?

A The warehouse could have been reported by a governmental fund on the fund-based financial statements.

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The Managements Discussion and Analysis has long been required when for-profit companies presented their financial statements under the rules of the SEC. Now, the GASB also requires this narrative overview to be included by state and local governments to help readers understand the financial and operating activities. It is supplemental information because it is not part of the financial statements but does help explain a significant part of the data that appears in those statements. It is normally found in the comprehensive annual financial report in a section just before the financial statements.

question 50
The City of Applegate has just produced its comprehensive annual financial report which includes a Managements Discussion and Analysis (MD & A) which was 21 pages long. The city council has now asked the citys accounting officer why this information was included. Which of the following statements is true?

A The GASB has mandated that the MD & A is required supplemental information presented with the governments financial

This agency is a component unit because it meets one of the criteria for that designation: it is fiscally dependent on the government. Fiscal dependency is present because the board cannot move forward without the governments approval of its budget and fee structure. Most component units are discretely presented. Their financial information is presented in the government-wide financial statements but to the far right side so it does not directly impact the numbers presented by the government.

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question 51
The citizens of the County of Barlow set up a small agency to promote business growth. Once formed, this agency is tied in with the county government. County government officials appoint a board to oversee the agency. The agency board sets a fee structure for businesses to join and then creates a budget to dictate the use of those funds. However, the board cannot move forward without county officials providing approval for the budget and the fee structure. In creating financial statements for the government, how should officials view the financial information provided by this agency?

A The agency is not related to the county government and, therefore, should have no impact on the governments financial statements. B The agency is a part of the general fund and should be reported in the same manner as other service activities. C The agency is a related organization so that its financial information is included in the notes to the financial statements but does not affect the reported figures. D The agency is a discretely presented component unit with its financial figures reported to the far right side of the government-wide financial statements.

On a statement of activities, the net expense (or net revenue) of any function or activity is shown by taking the direct expenses and netting them with program revenues. Program revenues include any revenues generated by the activity as well as its grants related specifically to that activity. For the school of the City of Fairgood, the direct expenses are the salary ($2.3 million), the maintenance ($400,000), and other expenses ($680,000) for a total of $3,380,000. The program revenues are the fees ($240,000) and the grant ($600,000) for a total of $840,000. The net expense of the school is $2,540,000 ($3,380,000 minus $840,000).

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question 52
The City of Fairgood is preparing to produce its government-wide financial statements. Assume that the city only has a single activity and that is education. This activity incurs salary expenses of $2.3 million, maintenance expenses of $400,000, and other direct expenses of $680,000. Students are assessed fees that amount to $240,000. During the current year, the state government gave grant money of $600,000 to assist in the payment of the salaries for teachers in the school. The City of Fairgood pays for its schools by assessing a property tax of $2 million and an income tax of $1 million. What is the net expense that the city should report for this activity?

A $1,540,000 B $2,540,000 According to the GASB, when a government incurs a gain or loss that is either unusual or infrequent and falls within the control of the government, it should be reported as a special item. Such special items are reported on the statement of activities but are presented separately after the general revenues to draw attention to their unique nature.

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question 53
The City of Lucky is preparing its government-wide financial statements for Year One. Government officials have raised the question of reporting a special item. Which of the following statements is true?

A A special item is a gain or loss that should be presented on the statement of activities but after all general revenues such as income taxes are reported.

In state and local government accounting, an income tax (and a sales tax) are known as derived tax revenues. They are taxes on events (the earning of income or the making of a sale). A derived tax revenue is recognized when the taxed event occurs. The income here was earned in Year One so the income tax is recognized within the governmentwide financial statements (which use accrual accounting) in Year One. In fund-based financial statements (for the governmental funds), modified accrual accounting is applied so that an additional standard must be met for revenue recognition. The resources must also be available quickly enough so that the money can be used to pay current obligations of Year One. The city has a policy that available is identified as anything received in 60 days. Thus, since $100,000 is collected each month, only the $200,000 to be collected in the first two months of Year Two is viewed as available to pay for Year One expenditures.

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question 54
The City of Sanborn levies an income tax. In Year One, city officials anticipate that the amount of this tax will be $350,000 and will be collected evenly over the period from January 1, Year Two to April 15, Year Two ($100,000 per month and $50,000 for the half month). City officials have a policy that any money collected within 60 days is viewed as available. How much of the revenue should be recognized at the end of Year One?

A $200,000 in government-wide financial statements and $200,000 in fund-based financial statements B $200,000 in government-wide financial statements and $350,000 in fund-based financial statements An imposed nonexchange revenue occurs when a state or local government receives financial resources without an underlying event or transaction such as a sale or the creation of income. For most governments, a property tax is the main example of an imposed nonexchange since it is not a tax on an event. However, fines and forfeitures are also mentioned specifically by GASB as other common examples. In contrast, a grant or gift has to be reported as either a government-mandated nonexchange transaction or a voluntary nonexchange transaction.