Question

A city assesses property owners $50 million to extend sewer lines to their neighborhood. By year-end, however, it has not begun construction of the new lines and has not collected any of the assessments. It accounts for its wastewater services in an enterprise fund. What should the government do in its year-end enterprise fund financial statements:

Answer 1

Answer:

Recognize the assessments as assessments receivable and revenue.

Explanation:

Practically, this will result in a receivable in the reserve fund, if the amounts are not received when due.

This could be seen when an/a corporation may decide on the amount of an assessment years before the cash is been used.

But cannot really obtain the revenue at the time of the decision, since the corporation can change its decision up until the day the amount is due. Also there are no specific parties being assessed, until the owner on record is known on the day the assessment is due, also the assessment should be recognized as revenue of the reserve fund when due.