3 Accounting
3.5 Deferred Outflows/Inflows of Resources
3.5.1 Classification of Deferred Outflows/Inflows of Resources
3.5.1.10 GASB Statement 63, Financial Reporting of Deferred Outflows of Resources, Deferred Inflows of Resources, and Net Position requires local governments to distinguish assets from deferred outflows of resources and liabilities from deferred inflows of resources.
3.5.1.20 Assets are resources with present service capacity that the government presently controls.
- Prepayments such as rent, insurance, etc.
3.5.1.30 Deferred outflow of resources is a consumption of net assets by the government that is applicable to a future reporting period. Deferred outflows are always debits.
- Accumulated decrease in fair value of hedging derivatives.
- Grants paid in advance when all eligibility requirements except timing requirement have been met.
- Deferred loss on refunding.
- Deferred outflows related to pensions.
- Deferred outflows related to OPEB.
- Goodwill – when an acquiring government provides a consideration exceeding the net position acquired (GASB Statement 69, Government Combinations and Disposal of Government Operations).
3.5.1.40 Liabilities are present obligations to sacrifice resources that the government has little or no discretion to avoid.
- Unearned revenue: Assets recorded prior to the occurrence of either an exchange or certain nonexchange transaction in which the government cannot recognize a revenue. Amounts reported in both the governmental fund and the government wide statements must be the same amount. Examples include:
- Derived tax revenues (e.g., sales tax, MVFT, hotel/motel tax, etc.) received in advance.
- Charges for goods or services revenue received before the exchange has occurred.
- Grants received in advance when any eligibility requirement, except timing (see below), has not been met.
3.5.1.50 Deferred inflow of resources is an acquisition of net assets by the government that is applicable to a future reporting period.
- Accumulated increase in fair value of hedging derivatives.
- Deferred service concession arrangement receipts.
- Grants received in advance when all eligibility requirements have been met except timing requirement.
- Deferred gain on refunding.
- Sale of future revenues.
- Special assessments.
- Deferred inflows related to pensions.
- Deferred inflows related to OPEB.
- Deferred inflows related to leases (lessors only; GASB 87)
- Deferred inflows related to conduit debt arrangements (GASB 91)
- Unearned revenues: property taxes received before the legally enforceable claim has occurred (or any other imposed nonexchange transactions). Amounts reported in both the governmental fund and the government-wide statements must be the same amount.
- Modified accrual (governmental fund statements) only, unavailable revenue: assets recorded in governmental funds as a result of revenue generating transactions before the revenue is available under recognition criteria (e.g., courts receivables, property tax receivables, unpaid licenses and permits, other unpaid receivables, etc.). This category would not be reported on the government wide statements.
3.5.1.60 GASB expressly reserved for itself the determination of which items traditionally reported as assets or liabilities should be reclassified as deferred outflows or inflows of resources. The use of the term deferred should be limited to items reported as deferred outflows or inflows of resources.
3.5.1.70 Do not confuse the deferred inflows or deferred outflows of resources with inflows of resources or outflows of resources.
Inflows of resources (i.e., revenues) is an acquisition of net assets by the government that is applicable to the current reporting period. Example: loan origination fees (except for the portion related to points), etc.
Outflows of resources (i.e., expenses) is a consumption of net assets by the government that is applicable to the current reporting period. Example: debt issuance costs (other than prepaid insurance), etc.
3.5.1.80 When the amounts of deferred inflows and outflows are presented in the statement of net position or a governmental fund balance sheet in aggregation, GASB Statement 63, Financial Reporting of Deferred Outflows of Resources, Deferred Inflows of Resources, and Net Position requires the governments to provide details of different types of deferred amounts in the notes to financial statements if significant components of the total deferred amounts are obscured by aggregation.