Preface ix Chapter 1 Introduction and Background 1 What Are Generally Accepted Accounting Principles? 1 Who Sets Generally Accepted Accounting Principles for Governments? 5 Do Governments Need to Comply with Generally Accepted Accounting Principles? 9 Why Is Governmental Accounting and Financial Reporting Different from Commercial and Not-for-Profit Accounting and Financial Reporting? 10 To What Entities Do Governmental Generally Accepted Accounting Principles Apply? 15 Chapter 2 Basic Governmental Accounting Concepts 19 Understanding the Different Bases of Accounting 20 Understanding What Measurement Focuses Are Used by Governments 26 Defining and Understanding the Nature of Assets 29 Defining and Understanding the Nature of Liabilities 43 Defining and Understanding the Nature of Net Assets 49 Chapter 3 Understanding Fund Accounting 55 Fund Fundamentals 56 Governmental Funds 58 Proprietary Funds 75 Fiduciary Funds 82 Chapter 4 Basics of Governmental Financial Statements 89 General-Purpose Financial Statements 90 Management's Discussion and Analysis 90 The Basic Financial Statements 94 Required Supplementary Information 137 Comprehensive Annual Financial Report 139 Chapter 5 Understanding the Reporting Entity 147 Background 148 Accountability Focus 149 Financial Reporting Entity Defined 150 Display of Component Units 161 Chapter 6 Revenues from Nonexchange Transactions 169 Classes of Nonexchange Transactions 170 Accounting Requirements 172 Property Taxes 175 Income and Sales Taxes, and Other Derived Tax Revenues 177 Adjustments for the Accrual Basis of Accounting 180 Grants and Other Financial Assistance 182 Chapter 7 Capital Assets 187 Where Are Capital Assets Recorded in the Financial Statements? 188 Recording and Valuing Capital Assets 189 Understanding Depreciation 193 Using the Modified Approach in Lieu of Depreciating Infrastructure Assets 197 The Basics of Capitalized Interest 200 Capital Assets Resulting from Capital Lease Transactions 206 Intangible Assets 215 Impairments of Capital Assets 217 Chapter 8 Accounting for Pensions and Other Postemployment Benefits 225 Requirements for Defined Benefit Pension and OPEB Plans 229 Calculation of the ARC 232 Parameters for Actuarial Calculations, Including the ARC 233 Net Pension or OPEB Obligation 242 Recording Pension- and OPEB-Related Assets, Liabilities, and Expenditures/Expenses 243 Pension and OPEB Disclosures 245 Employers with Defined Contribution Plans 246 Chapter 9 Sundry Accounting Topics 249 Accounting for Investments 249 Reporting Unrealized Gains or Losses 252 Investment and Deposit Disclosures 253 Compensated Absence Accruals 255 Landfill Closure and Postclosure Care Costs 262 Derivatives, Including Interest Rate Swaps 269 Securities Lending Transactions 281 Chapter 10 Upcoming Developments in Governmental Accounting 287 Pension (and OPEB) Accounting--Revisited 288 Index 293.