Academic journal article Journal of Accountancy

GASB Issues Statement 21 on Escheat Property and DM on Contributed Capital

Academic journal article Journal of Accountancy

GASB Issues Statement 21 on Escheat Property and DM on Contributed Capital

Article excerpt

The Governmental Accounting Standards Board issued Statement no. 21, Accounting for Escheat Property, establishing reporting standards for escheat property and for liabilities and interfundtransfers related to such property. The statement is effective for periods beginning after June 15, 1994.

Escheat property is property that reverts to a government entity in the absence of legal claimants or heirs and includes abandoned and unclaimed property. For example, a bank account in which there had been no activity for a period of time would be deemed legally abandoned. If after following set procedures the bank was unable to locate the rightful owners, the bank account would revert to the government--and be subject to recovery by legal claimants.

According to Philip Calder, a partner of Ernst & Young in New York City, the statement will not have major ramifications. Like several recent GASB statements, it was issued because "there were a variety of alternative methods being used and GASB wanted to narrow the alternatives."

Statement no. 21 requires escheat property to be reported either in an expendable trust fund or in the fund to which the property ultimately will revert. …

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