The modified accrual basis of accounting would recognize revenues in the same way as does the accrual basis of accounting except that, again, the availability criteria must be met. For property taxes, the most common type of imposed exchange transaction, the period of time that revenues collected after the fiscal year-end are considered available is defined as sixty days after the fiscal year-end. Property taxes that are receivable at the fiscal year-end but that will not be collected until more than sixty days after the fiscal year-end are recorded at year-end as deferred revenue.

Government-Mandated and Voluntary Nonexchange Transactions
The accounting rules work in a similar manner and will be discussed together.

Accrual Basis of Accounting
The accounting for government-mandated and voluntary nonexchange transactions centers on determining whether a transaction has occurred. One of the key determinants as to whether a transaction has occurred is whether all eligibility requirements to receive the revenue have been met. Compliance with time requirements is required for a transaction to have occurred. Accordingly, no revenues or receivables are recorded until any time requirements are met. In other words, a grant awarded to fund a program in the subsequent fiscal year does not meet the time requirements. The recipient government is not entitled to the resources until the next fiscal year. When the time requirements and any other eligibility requirements are met, the government would record the revenue (and any receivables) from the nonexchange transaction in the period that these requirements are met.

Taken From : Governmental Accounting Made Easy

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