This paper analyses the information provided from Beautifully Fabulous State. The information assists in preparation of statement net assets. Statement of net assets has three major components: the asset part, the liability part and the net asset section. The paper also provides definitions of various components of statement of net assets.
¶ … Beautifully Fabulous State CARF. The information assists in preparation of statement of net assets. The paper also provides definitions of various components of statement of net assets.
Statement of Net Assets
According to Governmental Accounting Standards Board (2007), a statement of net assets is similar to a balance sheet. It has both asset section as well as liability section. An asset refers to resources the government employs in its operations. On the other hand, a liability refers to government's commitment to transfer its resources to other entities in the future. Hence, a statement of net assets reports the resources the government owns after clearing its obligations.
Total Asset Section
The total asset section constitutes of two parts: the current asset part and the non-current asset part. Current assets are assets that the government uses in a given financial year. They do not last more than a year. On the other hand, non-current assets last for more than a fiscal year.
Cash and cash equivalents, receivables, inventories, investments, securities lending collaterals amongst others constitute current assets. According to IFRS Dictionary, cash refers to cash on hand together with demand deposits. On the other hand, Cash equivalents refer to short-term investments. Such investments are liquid and can undergo conversion into cash without a significant loss on its face value. Investopedia defines receivables as customers' short-term obligation to an entity resulting from delivery of goods or provision of services. Similarly, Business Dictionary defines inventories as tangible goods that an organization employs in support activities, production of other items or goods for resale. Investment refers to routing of funds to acquire financial instruments in order to gain from their values appreciation or interest earnings (Finance maps of the world, 2012). Globalcustody defines security-lending collaterals as assets an entity hold as a guarantee on loans advanced to borrowers.
Beautifully Fabulous State
Statement of Net Assets
as of December 31, 2008
(in thousands)
Assets
Current assets:
Cash and cash equivalents
1,649.89
85.10
1,734.99
Receivables
6,269.80
44.14
6,313.94
Inventories
43.88
8.46
52.34
Investments
Securities lending collaterals
Other current assets
Total current assets
9,079.81
10,059.76
Non-current asset and deferred outflow:
Total capital assets
19,436.64
0.37
19,437.01
Interest in joint venture
32.43
0
32.43
Other non-current assets
59.85
20.50
80.35
Warrants outstanding
4.50
Deferred outflows
1,000.18
1,267.16
Total non-current assets and deferred outflows
20,638.47
20,930.82
Total assets
29,718.28
1,272.29
30,990.57
Likewise, non-current assets constitute of various components including warrants outstanding. Investopedia defines warrants as derivative securities that give the holder the right to purchase equity securities at a definite price within a specific period from the issuer. In order to compute total assets, deferred outflows need to be included as part of the assets.
Total Liabilities
Total liabilities are composed of both current and long-term liabilities. Current liabilities are obligations falling due in the current financial year. Long-term liabilities fall due in the ensuing fiscal periods.
Beautifully Fabulous State
Statement of Net Assets
as of December 31, 2008
(in thousands)
Current liabilities:
Obligation under security lending
Other current liabilities
4,328.09
Total current liabilities
4,588.28
Long-term liabilities
9,271.41
Total liabilities
13,859.69
14,768.12
Net Assets
To determine net assets, accountants deduct total liabilities from total asset values. This should coincide with the values resulting from following the formal way of computing net assets. This includes summing up unrestricted net assets, restricted (for debt) assets and invested in capital assets, net of related debt.
Beautifully Fabulous State
Statement of Net Assets
as of December 31, 2008
(in thousands)
Cont:
Invested in capital assets, net of related debt
Restricted for debt service
Unrestricted
Total net assets
15,858.59
16,222.45
According to Governmental Accounting Standards Board, invested in capital assets (net of related debts) is the difference between capital assets and debt amount an entity incurs in order to finance such capital assets. Restricted assets devolve from stringent regulations from the government or donors who determine asset particular use. On the other hand, unrestricted net assets refer to assets used for any purpose unrestrictedly. Since all these three components of net assets are missing in the question and the total net assets provided, the task is to find the missing component of statement of net assets. This missing component is deferred outflows.
Governmental Accounting Standards Board provides a format for preparing statement of net asset. Other formats are available in the Annual financial reports of state agencies and universities (Combs, 2012) and New York State Comptroller's website on local government and school accountability.
Reference
Business dictionary. (n.d). Inventory. Retrieved August 13, 2012 from http://www.businessdictionary.com/definition/inventory.html
Finance maps of the world. What is investment. (2012) Retrieved August 13, 2012 from http://finance.mapsofworld.com/investment
You’re 81% through this paper. Sign up to read the full paper.
Sign Up Now — Instant Access Already a member? Log inAlways verify citation format against your institution’s current style guide requirements.