400-600 words with references
In a recent city meeting, it was agreed that the city was going to build a new town hall. Long-term bonds, intergovernmental transfers, and public donations will be used to construct and maintain the building. The major discussion was how to record the donations meant to fund ongoing maintenance costs. One group wants to set up a permanent fund for the principle of the investments and use a special revenue fund to account for the earnings of the investments and their use. The other group wants to use a private purpose trust fund for the principle and interest. Address the following:
- Focus on the maintenance costs, not the building of the town hall
- Which group do you agree with? Do you feel that there is a better way to record these transactions?
- Give details that support your choice. Mention bonds and transfers