12 Jan 1. The citizens of a defined geographical area of
1. The citizens of a defined geographical area of the City of Sale authorized a special assessment to be levied on their property to finance the reconstruction of the sewer system infrastructure that serves the area. The City will solicit bids, oversee reconstruction, issue the debt in the name of the City, and service the debt. The City is NOT obligated in any manner for the debt but will collect the special assessments and make principal and interest payments to the bondholders. Discuss the appropriate accounting for the construction phase and the debt service phase of this project. Justify the required accounting and financial reporting for these two phases of this project.2. What is arbitrage? What are its potential uses and/or abuses? How are potential abuses regulated?3. How should governments report their capital projects and debt service activities in their government-wide financial statements?4. Governments often receive interest on the temporary investment of capital debt proceeds. Some believe that governments are inconsistent in the way they report interest and other earnings on investments compared to interest on their debt. Explain this comment. Do you believe it is inconsistent?
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