Question

The City of Charlestown levied property taxes in the amount of $10,000,000. The taxes were levied July 1, 2016 for the fiscal year ended June 30, 2017. During the year ended June 30, 2017, $8,900,000 in property taxes were collected from this levy. It is estimated that $620,000 will be collected during the next 60 days, $300,000 will be collected more than 60 days after June 30, 2017, and $180,000 will never be collected.

When preparing the government-wide financial statements, how much property tax revenue should be recognized for the year ended June 30, 2017?
A. $ 8,900,000.
B. $ 9,800,000.
C. $ 9,820,000.
D. $10,000,000.

Answer 1

The property tax revenue to be recognized in the government-wide financial statements for the City of Charlestown for the year ended June 30, 2017, is $9,520,000, including taxes collected during the year and those estimated to be collected within the next 60 days.

Step-by-step explanation:

The City of Charlestown levied property taxes for the fiscal year ended June 30, 2017, in the amount of $10,000,000. When preparing the government-wide financial statements, the total property tax revenue to be recognized for the year is the amount collected plus the amount expected to be collected shortly after the year-end that meets the available criterion.

So, the calculation for the recognized revenue is as follows:

• Property taxes collected during the year: $8,900,000
• Estimated taxes to be collected within 60 days after year-end: $620,000
• Revenue recognized: $8,900,000 + $620,000 = $9,520,000

The amount collectible more than 60 days after the year-end and the uncollectible amount are not recognized as revenue in the government-wide financial statements for the year ended June 30, 2017. Therefore, the correct answer is C. $9,520,000.