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Reporting Requirements for Annual Financial Reports of State Agencies and Universities

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Reporting Requirements for Annual Financial Reports of State Agencies and Universities

Capital Assets

Capital Assets
Master Lease Purchase Program

The following guidance for the Master Lease Purchase Program (MLPP) is provided to meet statewide financial reporting objectives. Agencies that enter into a contractual agreement with the Texas Public Finance Authority (TPFA) to finance capital projects are required to record the asset acquired and the related depreciation. TPFA records the related liability and interest.

The decision to record the asset and related liability separately (in two different agencies) is based on the fact that the ACFR combines all agencies thereby matching the assets and related liabilities on a statewide basis. Each agency must enter the annual capital outlay transfer in USAS using Entry #3 TPFA, as shown below. Each agency must coordinate the entry with TPFA and is accountable for the assets subject to MLPP, which requires the normal inventory and accounting controls exercised for all agency assets.

Do not include the Master Lease Purchase Program Payments with other lease information.

Enter assets acquired under the Master Lease Purchase Program (MLPP) into SPA using the capital lease acquisition method, if the asset meets the capitalization threshold.

Purchase of MLPP

SPA Entries Made by Agencies using MLPP
Acquisition Method 08 (Other Debt Instruments)
Debt Finance Method 02 (MLPP)
Paid-Off Flag (Default Value) N

Reporting Assets Under MLPP Lease Obligation

Agencies report MLPP capital assets on their books.

AFR Note 2 SPA Entries Made by Agencies
Agencies (In first year of MLPP only)
Show increase in additions column for related asset category.		 Paid-Off Flag – Stays the same N

Report Presentation for Master Lease Purchase Program (MLPP)

Fund Financial Statements
  TPFA Governmental Activities Business-Type Activities   Explanation of Entries
Entry #       Entry #  
1  Cash
  • Bonds and Notes Issued
  • Premium (Discount) on Bonds and Notes Issued
 		 No entry No Entry 1 TPFA receives bond and note proceeds.
2 Capital Outlay Expense
  • Cash
 		 No entry No Entry 2 TPFA spends the bond and note proceeds on capital asset.
3 Transfer Out
  • Capital Outlay Expense
 		 Capital Outlay Expense
  • Transfer In
 		 Capital Assets
  • Transfer In
 		 3 Annual entry needed in governmental activities FFS to transfer capital outlay expense from TPFA to the agencies that participate in the MLPP. Annual entry needed in business-type activities FFS to transfer capital outlay expense from TPFA and record the capital assets to the agencies that have entered into a MLPP.
4 Cash
  • Transfer In
 		 Transfer Out
  • Cash
 		 Transfer Out
  • Cash
 		 4 Asset agency pays TPFA annually and TPFA will pay off the corresponding bonds. Transactions recorded as transfers in/out (T-code 448/449) with comptroller objects 3964/7964.
5 Debt Service Payment — Principal
Debt Service Payment — Interest
  • Cash
 		 No entry No entry 5 TPFA makes the debt payment.
Year-end Entry on Fund Financial Statements
6 No entry No entry Depreciation Expense
  • Accumulated Depreciation
 		 6 Proprietary funds report depreciation expense on fund financials.
Government-wide Financial Statements
7 Bond Issued
Premium (Discount) on Bonds Issued

Interest on Long-term Debt
  • Bonds Payable — Non-current Portion
  • Bonds Payable — Current Portion
  • Debt Service Payment — Principal
  • Debt Service Payment — Interest
 		 Capital Assets
Depreciation Expense
  • Accumulated Depreciation
  • Capital Outlay Expense
 		 No entry 7 TPFA records the liability and annual payment. Governmental activities records the capital assets and depreciation expense.

The following corresponds to the entry numbers in the previous table:

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Entry #1—TPFA [+]

Seq No Batch Type Doc Type Eff Date Fin Agy TC AY PCA COBJ Amount R Fund Input GL
To Book Receipt of Bond Proceeds
(1) 2 D Issue Date XXX 191 CY xxxxx 3807 $XX.XX   XXXX N/A

Accounting effect of above entries:

Debit Credit
(1) To Book Receipt of Bond Proceeds    
  0045 Cash in State Treasury $ XX.XX  
  5000 Revenue Control Cash   $ XX.XX
  5100 GAAP Revenue Offset $ XX.XX  
  6035 Other Financing Sources   $ XX.XX

Entry #2—TPFA [+]

Seq No Batch Type Doc Type Eff Date Fin Agy TC AY PCA COBJ Amount R Fund Input GL
To Purchase Capital Assets with Bond Proceeds (this T-code liquidates with T-code 380)
(1) 4 9 Lease Date XXX 225 CY XXXXX XXXX $XX.XX   XXXX N/A

Accounting effect of above entries:

Debit Credit
(1) To Purchase Capital Assets with Bond Proceeds    
  5501 Expenditure Control-Accrued $ XX.XX  
  1009 Vouchers Payable   $ XX.XX
Generates Liquidating T-code 380
  1009 Vouchers Payable $ XX.XX  
  0045 Cash in State Treasury   $ XX.XX
  5500 Expenditure Control Cash $ XX.XX  
  5501 Expenditure Control-Accrued   $ XX.XX

Entry #3—TPFA [+]

Seq No Batch Type Doc Type Eff Date Fin Agy TC AY PCA COBJ Amount R Fund Input GL
To Transfer Out Capital Assets to Agencies
(1) 8 U 0832CY XXX 654 CY 99999 7973 $XX.XX   XXXX 9999
To Book Expense that goes with the Transfer
(2) 8 U 0832CY XXX 633 CY 99999 XXXX $XX.XX   XXXX 9999

Accounting effect of above entries:

Debit Credit
(1) To Transfer Out Capital Assets to Agencies    
  6051 Transfer Out – No Post to Tables $ XX.XX  
  9999 System Clearing   $ XX.XX
(2) To Book Expense that goes with the Transfer    
  9999 System Clearing $ XX.XX  
  5600 GAAP Expense Offset   $ XX.XX

Entry #3—Governmental and Business-Type [+]

Seq No Batch Type Doc Type Eff Date Fin Agy TC AY PCA COBJ Amount R Fund Input GL
To Transfer In Capital Assets from TPFA
(1) U 8 0832CY XXX 655 CY 99999 3973 $XX.XX   XXXX 9999
To Book Expense that goes with the Transfer
(2) U 5 0832CY XXX 632 CY 99999 XXXX* $XX.XX   XXXX 9999
*Use the same COBJ as used by TPFA in Entry #3, Seq No 2.

Accounting effect of above entries:

Debit Credit
(1) To Transfer In Capital Assets from TPFA    
  9999 System Clearing $ XX.XX  
  6011 Transfer In – No Post to Tables   $ XX.XX
(2) To Book Expense that goes with the Transfer    
  5600 GAAP Expense Offset $ XX.XX  
  9999 System Clearing   $ XX.XX

Entry #4—TPFA [+]

Seq No Batch Type Doc Type Eff Date Fin Agy TC AY PCA COBJ Amount R Fund Input GL
To Record Receipt of Annual Payment from Agencies
(1) 4 J Collection Date XXX 449 CY XXXXX 3964 $XX.XX   XXXX N/A

Accounting effect of above entries:

Debit Credit
(1) To Record Receipt of Annual Payment from Agencies    
  0045 Cash in State Treasury $ XX.XX  
  5000 Revenue Control Cash   $ XX.XX
  5100 GAAP Revenue Offset $ XX.XX  
  6011 Transfer In – No Post to Tables   $ XX.XX

Entry #4—Governmental and Business-Type [+]

Seq No Batch Type Doc Type Eff Date Fin Agy TC AY PCA COBJ Amount R Fund Input GL
To Record Annual Payment to TPFA
(1) 4 J Collection Date XXX 448 CY XXXXX 7964 $XX.XX   XXXX N/A

Accounting effect of above entries:

Debit Credit
(1) To Record Annual Payment to TPFA    
  5500 Expenditure Control Cash $ XX.XX  
  0045 Cash in State Treasury   $ XX.XX
  6051 Transfer Out – No Post to Tables $ XX.XX  
  5600 Expenditure Offset   $ XX.XX

Entry #5—TPFA [+]

Seq No Batch Type Doc Type Eff Date Fin Agy TC AY PCA COBJ Amount R Fund Input GL
To Record Annual Payment on the Bond Principal (this T-code liquidates with T-code 380)
(1) 8 9 Debt Svc Date XXX 225 CY XXXXX 7803 $XX.XX   XXXX N/A
To Record Annual Payment on the Bond Interest
(2) 8 9 0832CY XXX 225 CY XXXXX 7801 $XX.XX   XXXX N/A

Accounting effect of above entries:

Debit Credit
(1) To Record Annual Payment on the Bond Principal    
  5501 Expenditure Control-Accrued $ XX.XX  
  1009 Vouchers Payable   $ XX.XX
  Generates Liquidating T-code 380    
  1009 Vouchers Payable $ XX.XX  
  0045 Cash in State Treasury   $ XX.XX
  5500 Expenditure Control Cash $ XX.XX  
  5501 Expenditure Control-Accrued   $ XX.XX
Debit Credit
(2) To Record Annual Payment on the Bond Interest    
  5501 Expenditure Control-Accrued $ XX.XX  
  1009 Vouchers Payable   $ XX.XX
  Generates Liquidating T-code 380    
  1009 Vouchers Payable $ XX.XX  
  0045 Cash in State Treasury   $ XX.XX
  5500 Expenditure Control Cash $ XX.XX  
  5501 Expenditure Control-Accrued   $ XX.XX

Entry #6—Business-Types [+]

Seq No Batch Type Doc Type Eff Date Fin Agy TC AY PCA COBJ Amount R Fund Input GL
To Record Depreciation Expense
(1) 5 U 0832CY XXX 632 CY 99999 7XXX* $XX.XX   XXXX XXXX*
*For a list of COBJs and GL accounts that can be used in this entry, see Recording Depreciation of Capital Assets.

Accounting effect of above entries:

Debit Credit
(1) To Record Depreciation Expense    
  5600 GAAP Expenditure Offset $ XX.XX  
  XXXX GL Account for Accumulated Depreciation   $ XX.XX

Entry #7—TPFA [+]

Seq No Batch Type Doc Type Eff Date Fin Agy TC AY PCA COBJ Amount R Fund Input GL
To Record Non-Current Bond and Note Payable Additions
(1) 5 U 0832CY XXX 516 CY 99999 3XXX $XX.XX   XXXX XXXX
To Record Non-Current Bond and Note Payable Reductions
(2) 5 U 0832CY XXX 503 CY 99999 7XXX $XX.XX   XXXX XXXX
To Record Current Bond and Note Payable (due within 1 year)
(3) 5 U 0832CY XXX 537 CY 99999 N/A $XX.XX   XXXX XXXX
To Reverse Portion of Current Bond and Note Payable from Non-Current Bond and Note Payable
(4) 5 U 0832CY XXX 537 CY 99999 N/A $XX.XX R XXXX XXXX
To Record Interest Expense Accrued on a Full Accrual Basis not Recorded in FFS
(5) 5 U 0832CY XXX 632 CY 99999 7801 $XX.XX   XXXX 9999
To Record Corresponding Interest Payable from the entry above
(6) 5 U 0832CY XXX 645 CY 99999 N/A $XX.XX   XXXX 1610

Accounting effect of above entries:

Debit Credit
(1) To Record Non-Current Bond and Note Payable Additions    
  6135 BC Other Financing Sources $ XX.XX  
  XXXX GL Account for Bond and Note Payable   $ XX.XX
(2) To Record Non-Current Bond and Note Payable Reductions    
  XXXX GL Account for Bond and Note Payable $ XX.XX  
  5650 BC Expenditure Offset   $ XX.XX
(3) To Record Current Bond and Note Payable (due within 1 year)    
  9992 BC System Clearing $ XX.XX  
  XXXX GL Account for Bond and Note Payable   $ XX.XX
(4) To Reverse Portion of Current Bond and Note Payable from Non-Current Bond and Note Payable    
  XXXX GL Account for Bond and Note Payable $ XX.XX  
  9992 BC System Clearing   $ XX.XX
(5) To Record Interest Expense Accrued on a Full Accrual Basis not Recorded in FFS    
  5600 GAAP Expenditure Offset $ XX.XX  
  9999 System Clearing   $ XX.XX
(6) To Record Corresponding Interest Payable from the entry above    
  9999 System Clearing $ XX.XX  
  1610 BC Interest Payable   $ XX.XX

Entry #7—Governmental Activities (Basis Conversion) [+]

Seq No Batch Type Doc Type Eff Date Fin Agy TC AY PCA COBJ Amount R Fund Input GL
To Record the Leased Asset
(1) 5 U 0832CY XXX 513 CY 99999 7XXX* $XX.XX   XXXX XXXX**
To Record the Depreciation of Leased Asset
(2) 5 U 0832CY XXX 512 CY 99999 7XXX** $XX.XX   XXXX XXXX**
*Contact TPFA for the correct COBJ to use.
**For a list of COBJs and GL accounts that can be used in this entry, see Recording Depreciation of Capital Assets.

Accounting effect of above entries:

Debit Credit
(1) To Record the Leased Asset    
  XXXX GL Account for Asset $ XX.XX  
  5650 BC Expenditure Offset   $ XX.XX
(2) To Record Depreciation of Leased Asset    
  5650 BC Expenditure Offset $ XX.XX  
  XXXX GL Account for Asset Being Depreciated   $ XX.XX