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GASB issues Statement 21 on escheat property and DM on contributed capital.

The Governmental Accounting Standards Board issued Statement no. 21, Accounting for Escheat Property, establishing reporting standards for escheat property and for liabilities and interfundtransfers related to such property. The statement is effective for periods beginning after June 15, 1994.

Escheat property is property that reverts to a government entity in the absence of legal claimants or heirs and includes abandoned and unclaimed property. For example, a bank account in which there had been no activity for a period of time would be deemed legally abandoned. If after following set procedures the bank was unable to locate the rightful owners, the bank account would revert to the government--and be subject to recovery by legal claimants.

According to Philip Calder, a partner of Ernst & Young in New York City, the statement will not have major ramifications. Like several recent GASB statements, it was issued because "there were a variety of alternative methods being used and GASB wanted to narrow the alternatives."

Statement no. 21 requires escheat property to be reported either in an expendable trust fund or in the fund to which the property ultimately will revert. Escheat revenue should be reduced and a fund liability reported to the extent it is probable the escheat property will be reclaimed and paid to claimants. Such payments are to be reported as a reduction of the liability.

Hearing on contributed capital. The GASB also issued a discussion memorandum (DM) to gather views on how contributions, subsidies, tap fees and similar inflows reported in government proprietary funds should be recognized and displayed in financial statements. A public hearing on the DM will be held at the GASB's Norwalk, Connecticut, office in February 1994.

Written comments are due by January 17, 1994, which also is the deadline for informing GASB of an intent to speak at the hearing.

Copies of Statement no. 21 are available for $8.50. Single copies of the DM, Reporting Contributions, Subsidies, Tap Fees, and Similar Inflows to Enterprise and Internal Service Funds and to Entities Using Proprietary Fund Accounting, are available without charge until January 17. To order either document, call the GASB order department at (203) 847-0700, ext. 555.
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Title Annotation:discussion memorandum
Publication:Journal of Accountancy
Article Type:Brief Article
Date:Dec 1, 1993
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