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<br />-23- <br />GASB STATEMENT NO. 88, CERTAIN DISCLOSURES RELATED TO DEBT, INCLUDING DIRECT <br /> BORROWINGS AND DIRECT PLACEMENTS <br /> <br />The primary objective of this statement is to improve the information that is disclosed in notes to <br />government financial statements related to debt, including direct borrowings and direct placements. It also <br />clarifies which liabilities governments should include when disclosing information related to debt. <br /> <br />The requirements of this statement will improve financial reporting by providing users of financial <br />statements with essential information that currently is not consistently provided. In addition, information <br />about resources to liquidate debt and the risks associated with changes in terms associated with debt will <br />be disclosed. As a result, users will have better information to understand the effects of debt on a <br />government’s future resource flows. <br /> <br />This statement defines debt for purposes of disclosure in notes to financial statements as a liability that <br />arises from a contractual obligation to pay cash (or other assets that may be used in lieu of cash) in one or <br />more payments to settle an amount that is fixed at the date the contractual obligation is established. The <br />statement requires that additional essential information related to debt be disclosed in notes to financial <br />statements, including unused lines of credit; assets pledged as collateral for the debt; and terms specified <br />in debt agreements related to significant events of default with finance-related consequences, significant <br />termination events with finance-related consequences, and significant subjective acceleration clauses. It <br />also requires that existing and additional information be provided for direct borrowings and direct <br />placements of debt separately from other debt. The requirements of this statement are effective for <br />reporting periods beginning after June 15, 2018. <br /> <br />GASB STATEMENT NO. 89, ACCOUNTING FOR INTEREST COST INCURRED BEFORE THE END OF A <br /> CONSTRUCTION PERIOD <br /> <br />The objectives of this statement are to enhance the relevance and comparability of information about <br />capital assets and the cost of borrowing for a reporting period and to simplify accounting for interest cost <br />incurred before the end of a construction period. <br /> <br />This statement requires that interest cost incurred before the end of a construction period be recognized as <br />an expense in the period in which the cost is incurred for financial statements prepared using the <br />economic resources measurement focus. As a result, interest cost incurred before the end of a construction <br />period will no longer be included in the historical cost of a capital asset reported in a business-type <br />activity or enterprise fund. This statement also reiterates that in financial statements prepared using the <br />current financial resources measurement focus, interest cost incurred before the end of a construction <br />period should continue to be recognized as an expenditure on a basis consistent with governmental fund <br />accounting principles. <br /> <br />The requirements of this statement are effective for reporting periods beginning after December 15, 2019. <br />Earlier application is encouraged. The requirements of this statement should be applied prospectively.