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20478HOU
In a nonexchange transaction, a government either gives or receives value without directly receiving equal value in exchange.
To illustrate what I mean by directly, let’s look at a simple example.  In a classic exchange transaction, such as buying groceries, I give the grocery store cash and they give me groceries. 
However, when I give the government my income taxes, exactly what do I get in return?
The standard outlines 4 classes of nonexchange transactions.
The standard outlines 4 classes of nonexchange transactions.
Both parties may be governments or one party may be a nongovernmental entity, including and individual.
Often the provider establishes purpose restrictions and eligibility requirements.
Principal characteristics of voluntary nonexchange transactions are:
1)  they are not imposed on the provider or the recipient, and
2)  fulfillment of eligibility requirements is essential for a transaction to occur
Required characteristics of recipients - recipient has the characteristics specified by the provider
Time requirements - usually specified in enabling legislation, such as specification of the grant period
Reimbursements - provider offers resources on a reimbursement basis and the recipient has incurred allowable costs under the program
Contingencies - Specific action required by the provider has occurred, such as paying the required match on a grant program or raising a certain amount of money to be matched by the provider.
Required characteristics of recipients - recipient has the characteristics specified by the provider
Time requirements - usually specified in enabling legislation, such as specification of the grant period
Reimbursements - provider offers resources on a reimbursement basis and the recipient has incurred allowable costs under the program
Contingencies - Specific action required by the provider has occurred, such as paying the required match on a grant program or raising a certain amount of money to be matched by the provider.
Required characteristics of recipients - recipient has the characteristics specified by the provider
Time requirements - usually specified in enabling legislation, such as specification of the grant period
Reimbursements - provider offers resources on a reimbursement basis and the recipient has incurred allowable costs under the program
Contingencies - Specific action required by the provider has occurred, such as paying the required match on a grant program or raising a certain amount of money to be matched by the provider.
Required characteristics of recipients - recipient has the characteristics specified by the provider
Time requirements - usually specified in enabling legislation, such as specification of the grant period
Reimbursements - provider offers resources on a reimbursement basis and the recipient has incurred allowable costs under the program
Contingencies - Specific action required by the provider has occurred, such as paying the required match on a grant program or raising a certain amount of money to be matched by the provider.
Required characteristics of recipients - recipient has the characteristics specified by the provider
Time requirements - usually specified in enabling legislation, such as specification of the grant period
Reimbursements - provider offers resources on a reimbursement basis and the recipient has incurred allowable costs under the program
Contingencies - Specific action required by the provider has occurred, such as paying the required match on a grant program or raising a certain amount of money to be matched by the provider.
Required characteristics of recipients - recipient has the characteristics specified by the provider
Time requirements - usually specified in enabling legislation, such as specification of the grant period
Reimbursements - provider offers resources on a reimbursement basis and the recipient has incurred allowable costs under the program
Contingencies - Specific action required by the provider has occurred, such as paying the required match on a grant program or raising a certain amount of money to be matched by the provider.
Net assets must continue to be reported as restricted until
1) resources are used for their specified purpose
2) as long as the provider requires the resources to be maintained intact (endowment principal)
If eligibility requirements or purpose restrictions which are initially met are later violated, must reverse the amount that the provider is expected to reclaim.
This is a derived tax revenue. 
The city should recognize assets and revenues for each night a guest stays in a hotel room in the City. 
The requirement to use tax proceeds for the convention center is a purpose restriction, which requires net assets be reported as restricted until they are expended for construction.
This illustrates an imposed nonexchange transaction.
The City should recognize a receivable on January 1, 20x1 which is the date an enforceable legal claim arises.
Revenues should be recognized for the period May 1, 20x1 to April 30, 20x2 because it is the levy period for which the tax is applicable.
Any amounts collected between March 1, 20x1 and May 1, 20x1 should be DEFERRED until May 1, 20x1 as they are collected in advance of the levy period.
This is a derived tax revenue. 
The city should recognize assets and revenues for each night a guest stays in a hotel room in the City. 
The requirement to use tax proceeds for the convention center is a purpose restriction, which requires net assets be reported as restricted until they are expended for construction.
This illustrates an imposed nonexchange transaction.
The City should recognize a receivable on January 1, 20x1 which is the date an enforceable legal claim arises.
Revenues should be recognized for the period May 1, 20x1 to April 30, 20x2 because it is the levy period for which the tax is applicable.
Any amounts collected between March 1, 20x1 and May 1, 20x1 should be DEFERRED until May 1, 20x1 as they are collected in advance of the levy period.
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In the process of aggregating data for the statements of net assets and the statements of activities, some amounts reported as interfund activity and balances in the funds should be eliminated or reclassified.
Eliminations in the statement of activities should be made to eliminate the grossing-up effect.  Interfund receivables and payable should be eliminated in the governmental and business-type activities columns of the statements of net assets, except for the net residual amounts due between governmental and business type activities.  Amounts reported in the funds as receivable from or payable to fiduciary funds should be included as receivables and payables to external parties.  All internal balances should be eliminated in the total column.
In the process of aggregating data for the statements of net assets and the statements of activities, some amounts reported as interfund activity and balances in the funds should be eliminated or reclassified.
Eliminations in the statement of activities should be made to eliminate the grossing-up effect.  Interfund receivables and payable should be eliminated in the governmental and business-type activities columns of the statements of net assets, except for the net residual amounts due between governmental and business type activities.  Amounts reported in the funds as receivable from or payable to fiduciary funds should be included as receivables and payables to external parties.  All internal balances should be eliminated in the total column.
In the process of aggregating data for the statements of net assets and the statements of activities, some amounts reported as interfund activity and balances in the funds should be eliminated or reclassified.
Eliminations in the statement of activities should be made to eliminate the grossing-up effect.  Interfund receivables and payable should be eliminated in the governmental and business-type activities columns of the statements of net assets, except for the net residual amounts due between governmental and business type activities.  Amounts reported in the funds as receivable from or payable to fiduciary funds should be included as receivables and payables to external parties.  All internal balances should be eliminated in the total column.
In the process of aggregating data for the statements of net assets and the statements of activities, some amounts reported as interfund activity and balances in the funds should be eliminated or reclassified.
Eliminations in the statement of activities should be made to eliminate the grossing-up effect.  Interfund receivables and payable should be eliminated in the governmental and business-type activities columns of the statements of net assets, except for the net residual amounts due between governmental and business type activities.  Amounts reported in the funds as receivable from or payable to fiduciary funds should be included as receivables and payables to external parties.  All internal balances should be eliminated in the total column.
In the process of aggregating data for the statements of net assets and the statements of activities, some amounts reported as interfund activity and balances in the funds should be eliminated or reclassified.
Eliminations in the statement of activities should be made to eliminate the grossing-up effect.  Interfund receivables and payable should be eliminated in the governmental and business-type activities columns of the statements of net assets, except for the net residual amounts due between governmental and business type activities.  Amounts reported in the funds as receivable from or payable to fiduciary funds should be included as receivables and payables to external parties.  All internal balances should be eliminated in the total column.
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29
8
Does not require contribution of art collections or heritage assets
Historical cost is still preferred costing methodology.  Some provision to be made for assets held at transition.
If infrastructure assets records are inadequate, inventory only those assets which were acquired/constructed over the past 25 years and limit the inventory to major infrastructure assets such as roads, bridges, storm sewers, levees, pump stations, etc.
Under a maintenance/preservation approach, the infrastructure assets must be maintained to a level specified by the entity’s policy.  The condition of those assets is then assesses.  If the condition falls below the specified level, depreciation must be charged to that asset.
Depreciable assets must be disclosed separately from nondepreciable assets.
29
8
Does not require contribution of art collections or heritage assets
Historical cost is still preferred costing methodology.  Some provision to be made for assets held at transition.
If infrastructure assets records are inadequate, inventory only those assets which were acquired/constructed over the past 25 years and limit the inventory to major infrastructure assets such as roads, bridges, storm sewers, levees, pump stations, etc.
Under a maintenance/preservation approach, the infrastructure assets must be maintained to a level specified by the entity’s policy.  The condition of those assets is then assesses.  If the condition falls below the specified level, depreciation must be charged to that asset.
Depreciable assets must be disclosed separately from nondepreciable assets.
29
8
Does not require contribution of art collections or heritage assets
Historical cost is still preferred costing methodology.  Some provision to be made for assets held at transition.
If infrastructure assets records are inadequate, inventory only those assets which were acquired/constructed over the past 25 years and limit the inventory to major infrastructure assets such as roads, bridges, storm sewers, levees, pump stations, etc.
Under a maintenance/preservation approach, the infrastructure assets must be maintained to a level specified by the entity’s policy.  The condition of those assets is then assesses.  If the condition falls below the specified level, depreciation must be charged to that asset.
Depreciable assets must be disclosed separately from nondepreciable assets.
.
Description of required financial statements should include the differences between the government wide perspective and the fund perspective.
Condensed government wide information will be in the tradition financial statements format, not the net costs format.
Discussion of overall financial condition should focus on how the financial condition has changed over the past year. 
Description of required financial statements should include the differences between the government wide perspective and the fund perspective.
Condensed government wide information will be in the tradition financial statements format, not the net costs format.
Discussion of overall financial condition should focus on how the financial condition has changed over the past year. 
Discussion of known facts addresses only what is present at the date of the letter, not what is expected to happen in the future.
.
29
8
Does not require contribution of art collections or heritage assets
Historical cost is still preferred costing methodology.  Some provision to be made for assets held at transition.
If infrastructure assets records are inadequate, inventory only those assets which were acquired/constructed over the past 25 years and limit the inventory to major infrastructure assets such as roads, bridges, storm sewers, levees, pump stations, etc.
Under a maintenance/preservation approach, the infrastructure assets must be maintained to a level specified by the entity’s policy.  The condition of those assets is then assesses.  If the condition falls below the specified level, depreciation must be charged to that asset.
Depreciable assets must be disclosed separately from nondepreciable assets.
29
8
Does not require contribution of art collections or heritage assets
Historical cost is still preferred costing methodology.  Some provision to be made for assets held at transition.
If infrastructure assets records are inadequate, inventory only those assets which were acquired/constructed over the past 25 years and limit the inventory to major infrastructure assets such as roads, bridges, storm sewers, levees, pump stations, etc.
Under a maintenance/preservation approach, the infrastructure assets must be maintained to a level specified by the entity’s policy.  The condition of those assets is then assesses.  If the condition falls below the specified level, depreciation must be charged to that asset.
Depreciable assets must be disclosed separately from nondepreciable assets.
.