Some community leaders in St. Paul, MN desire a major league baseball team to re

Question

Some community leaders in St. Paul, MN desire a major league baseball team to relocate there. They want to build a domed stadium to attract such a team. After asking the City to help finance it, the City agreed to issue Stadium Bonds for this capital purpose. These bonds would not become part of the City’s consolidated financing, reporting entity. Also, the City would neither “guarantee” nor warrant the repayments of any proceeds. The City has asked how to account for these proposed transactions.

Explanation / Answer

City may record this as an advance with a condition that they will adjust the amount from the proceedings received from the matches and fees collected from the teams:

Loans and Advances Dr.

To Bank

When collection recived:

Bank A/c Dr.

To Loans and Advances

Show the amount of Loans and Advances in Asset side of the Balance Sheet

Under Short Term Loans & Advances

Amount of Collection within next 12 months

Under Long Term Loans & Advances

Amount of Collection after next 12 months

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