Academic journal article Journal of Accountancy

New Accounting Proposals

Academic journal article Journal of Accountancy

New Accounting Proposals

Article excerpt

The Governmental Accounting Standards Board issued a proposal on the accounting and financial reporting for nonexchange transactions. Such transactions occur when governments give or receive something of value and do not directly receive or give something of equal value in return, such as certain taxes, grants, contributions or donations. Comments on the proposal, Accounting and Financial Reporting for Nonexchange Transactions, are due by dune 20.

According to Penny Wardlow, GASB research manager, little guidance currently exists on the accrual basis of accounting for nonexchange transactions. She also said the financial reporting standards for such transactions were limited in scope and needed clarification. To make recognition easier, the GASB grouped nonexchange transactions into four classes:

1. Derived tax revenues. These include taxes imposed on exchange transactions, such as sales and personal and corporate income taxes.

2. Imposed nonexchange revenues. These include taxes other than those imposed on exchange transactions, such as property taxes and fines.

3. Government-mandated nonexchange transactions. These occur when a government at one level provides resources to a government at another level and requires that government to use the resources for a specific purpose, such as federal programs that state or local governments are mandated to perform.

4. Voluntary nonexchange transactions. These result from legislative or contractual agreements entered into willingly by two or more parties, such as certain grants or private donations. …

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