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Chapter 8
Long-Term Obligations
Questions for Review and Discussion
1. Unlike businesses, governments have the power to tax and, at least in theory, their
available resources are limited only by the wealth of their constituents. At the same
time, governments are charged with providing services, some of which, unlike those
provided by businesses, are essential to the public well-being and therefore cannot
be discontinued. Nevertheless, there are practical constraints on what they can
demand from their constituents and there may be considerable room for expenditure
cuts before the well being of the community is imperiled. The crucial issue,
therefore, involves balancing the needs and resources of the populace and the
demands of the creditors.
2. General long-term debt is the obligation of the government at-large and is thereby
backed by the government’s full faith and credit. Revenue debt, by contrast, is
secured only by designated revenue streams, such as from the sale of electricity,
highway tolls, rents, receipts from student loans or patient billings. Because revenue
debt is less secure than GO debt, it almost always commands higher interest rates.
Yet, if a single entity were to issue only general obligation debt its total interest
costs would likely be the same as if it were to issue a mix of both types.
3. The government would report the bonds at their face value plus or minus any
unamortized premiums or discounts. This amount differs from face value in that it
takes into account the unamortized premiums or discounts. It differs from market
value in that market value is equal to the present value of all required cash payments
discounted by a prevailing interest rate. Book value, however, is equal to the present
value of all required cash payments discounted by the interest rate that determined
the price of the bond when it was first issued (i.e., the yield rate).
4. The interest expenditure as reported in the debt service fund (a governmental fund)
would be equal to the required cash payment. That reported in the government-wide
statements would be equal to the required cash payment plus or minus the
amortization of the discounts or premiums — an amount also equal to the book
value of the debt times the initial yield rate.
5. Demand bonds are obligations that permit the holder (the lender) to demand
redemption within a specified period of time, usually one to 30 days, after giving
notice. The issuer can report them as long-term obligations if it has entered into a
qualifying take-out agreement (one that is non-cancellable, doesn’t expire for at
least a year, and is with an institution fiscally capable of honoring it).
6. The courts, not GAAP, determine the types of obligations subject to debt
limitations. In many jurisdictions the courts have focused on the non-appropriation
clauses included in capital leases, rather than on the economic substance of those
8-1
Granof and Khumawala 6e, Government and Not-for-Profit Accounting
leases. The non-appropriation clauses permit governments to cancel the leases if the
legislature fails in any year to appropriate the required funds for the lease payments.
Therefore, the courts have held that the leases do not obligate governments to the
same extent as do conventional debt instruments.
7. Tax Anticipation Notes (TANs) and Revenue Anticipation Notes (RANs) or a

combination of both known as TRANs— are short-term notes payable out of
specified streams of revenues. Governments issue these notes to meet cash and
other expenditure needs earlier in the fiscal year. They will not be converted into
long-term instruments and therefore, must be accounted for in the funds in which
the related revenues will be reported; they cannot be relegated to off-the-balance-
sheet status. Bond Anticipation Notes (BANs) are short-term notes issued by the
lender with the expectation that they will soon be replaced by long-term bonds.
Governments can issue BANs only after obtaining the necessary voter approval and
legislative authorization to issue long-term bonds. If a government as planned,
refunds the BANs with long-term bonds, then the notes are, in essence, long-term
obligations and generally accepted accounting principles provide that a government
may recognize BANs as long-term obligations if, by the date the financial
statements are issued, ‘‘all legal steps have been taken to refinance the BANs and
the intent is supported by an ability to consummate refinancing of the short-term
note on a long-term basis.
8. Overlapping debt refers to the obligations of property owners within a particular

government for the proportionate share of debts of other governments with
overlapping geographic boundaries. It represents obligations that are supported from
the same sources as the government’s direct debt. Overlapping debt is significant
because, like direct debt, it bears upon the government’s fiscal capacity to meet its
obligations as they come due.
9. Conduit debt represents bonds or similar instruments issued by a government on

behalf of a nongovernmental entity, such as a business or not-for-profit
organization. Governments are not required to report conduit debt on their balance
sheets because the debt is expected to be serviced entirely by the entity benefiting
from the debt, not the government itself. In economic substance, therefore, the
government permits a nongovernmental entity to use its status as a tax-exempt entity
to get the benefits of lower interest rates.
10. Moral obligation debt constitutes bonds or notes issued by one entity (usually a
state agency) but backed by a pledge of another entity (usually the state itself) to
seek appropriations to cover any debt service deficiencies. The debt proceeds are
typically used to construct projects or carry out activities that would otherwise be
undertaken by the state. The debt is referred to as “moral” obligation debt because
the promise is not legally enforceable. Moral obligation debt provides a means by
which a state can circumvent debt limitations. The state can reap the benefits of the
debt without having to actually issue it in its own name.
8-2
11. Bond ratings directly affect an issuer’s interest costs. The lower the rating the
higher the interest costs.
Exercises
EX 8-1
1. b
2. c
3. d
4. a
5. a
6. c
7. a
8. b
9. a
10. d
EX 8-2
1. c
2. b
3. d
4. c
5. b
6. a
7. d
8. c
9. a
10. c
EX 8-3
1. d $800,000
2. e $817,419
3. b $0
4. k $10,000,000
5. b $0
6. o $38,942,147
7. g $1,350,000
8-3
8. a $(34,942,147)
9. j $2,025,000
EX 8-4
1. Government-wide statements
Cash $ 89,322
Bond discount 10,678
Bonds payable $100,000
To record the issuance of bonds
Bond Interest expense $ 3,126

Cash $ 3,000
Bond discount 126
To record first period interest expense (3.5 percent of $89,322)

Cash $ 3,000
Bond discount 131
To record second period interest expense (3.5 percent of $89,448 — the initial issue price
of $89,322 plus the $126 of first period bond discount amortization)
2. Governmental fund statements
Cash $ 89,322
Other financing sources—bond proceeds $ 89,322
To record issuance of bonds
Bond Interest expenditure $ 3,000

Cash $ 3,000
To record first period interest expenditure
Bond Interest expenditure $ 3,000

Cash $ 3,000
To record second period interest expenditure
8-4
EX 8-5
1. To record issuance
Cash $200M
Other financing sources—proceeds
from issuance of long-term debt $200M
To record issuance of BANs
2. No entry would be necessary in a governmental fund to record the conversion of the

BANs to actual bonds
3. To adjust accounts assuming state was unable to convert
Other financing sources—proceeds

from issuance of long-term debt $200M
BANs payable $200M
To record the BANs as a current fund liability.
4. In the government-wide statements the BANs would be reported as a liability

irrespective of whether the state was able to convert. If the state were able to
convert, the bonds would be shown along with other long-term liabilities; if not, it
would be shown along with other short-term liabilities.
EX 8-6
General Fund Government-wide Statements
(in millions) (in millions)
1. Expenditure $ 6.6 Expense $ 7.7

Increase in debt 0.0 Increase in debt 1.1

Change in debt 0.0 Decrease in debt 0.5

Change in debt 0.0 Increase in debt 10.0

Change in debt 0.0 Increase in debt 100.0

Change in debt 0.0 Decrease in debt 1.0
8-5
EX 8-7
1. Upon inception of lease
Equipment held under lease $800,000

Capital lease obligations $800,000
To record the signing of the lease
2. First payment of interest
Capital lease obligations (lease principal) $ 60,694

Interest expense (lease interest) 48,000
Cash $108,694
To record the first lease payment (interest equals 6 percent of $800,000)
Depreciation expense $ 80,000

Accumulated depreciation—equipment
held under lease $ 80,000
To record first year’s depreciation ($800,000 divided by 10 years)
3. Each year the allocation of the payment will change. As the balance in the lease
liability is decreased, the proportion allocated to interest will decrease and that
allocated to principal will increase.
4. The lease would be recorded in the appropriate fund with a debit to “expenditures for
the acquisition of an asset” and a credit to “other financing sources – capital lease”
No liability or asset would be recognized. Each lease payment would be reported

entirely as expenditure. No depreciation would be charged.
EX 8-8
1.
Cash $36,321,000
Bond discount 3,679,000
Bonds payable $40,000,000
To record the issuance of bonds (in an unrestricted fund)
8-6
2.
Bond Interest expense $1,271,000

Bond discount amortized $ 071,000
Cash 1,200,000
To record the first semi-annual payment of bond interest (Cash payment is equal to 3
percent of bonds’ $40 million face value; interest expense is equal to 3.5 percent of
effective liability of $36,321,000 (in an unrestricted fund))
3.
Bond Interest expense $1,274,000

Bond discount amortized $ 074,000
Cash 1,200,000
To record the second semi-annual payment of bond interest (Cash payment is equal to 3
percent of bonds’ $40 million face value; interest expense is equal to 3.5 percent of new
effective liability of $39,322,000 — the previous effective liability of $36,321,000 plus the
$71,000 reduction in the discount) (in an unrestricted fund)
Continuing Problem
The solution to the continuing problem is based on the CAFR for the City of Austin,
Texas, for the year-ended September 30, 2011.
The 2011 CAFR can be found at:

https://assets.austintexas.gov/financeonline/downloads/cafr/cafr2011.pdf
City of Austin FY 2011
1. Per Note 6 (a), the schedule of long-term obligations, the city’s total long term
obligations of governmental activities in 2011 is $1,464.88 million and the total long
term obligations of business-type activities in 2011 is $5,402.194 million. The total
amount of debt is $6,867.074 million (p. 64). Per the government-wide statement of
net assets (net position) long term debt is $6,693.750 million (p.17). The CAFR does
not reconcile the two amounts. However, the difference represents the current portion
of long-term liabilities that is included in the balance sheet.
2. Other kinds of long-term debt the city reported in its statement of net position for
governmental activities are accrued compensated absences; claims payable; capital
appreciation bond interest payable; commercial paper notes payable, net of discount;
revenue notes payable; bonds payable, net of discount and inclusive of premium;
pension obligation payable; other post-employment benefits payable; capital lease
obligations payable; accrued landfill closure and postclosure costs; decommissioning
liability payable from restricted assets; derivative instruments-energy risk
8-7
management; derivative instruments-interest rate swaps; deferred credits and other

liabilities; and other liabilities payable from restricted assets.
3. The summary of changes in long-term obligations (p. 64) indicates an increase in

long-term borrowings during the year. The effect on total long-term liabilities at year
end is an overall increase in long-term liabilities in comparison to the beginning of
the year (p. 64).
4. As indicated in the statistical section, Table 14, the percentage of total net bonded
debt to assessed value of property (percentage of actual taxable value of property) is
1.35%, with a net general bonded debt per capita of $1,302,970 (p. 208).
5. As indicated in the statistical section - Table 16, Austin has a legal debt margin of
$10,296,099. (p. 210)
6. As indicated in the schedule of long-term liabilities the city has capital lease
obligations outstanding of $43 million in business-type activities. No capital leases
were initiated in governmental activities or business-type activities during the fiscal
year (p. 64).
7. Per the Statistical section schedule, “Direct and overlapping Governmental activities
Debt,” the total direct debt is $938,128, and the total overlapping debt is $5,242,378
(p. 209).
8. Per note 15 (p. 100), the city has a substantial amount of conduit bonds outstanding.
These bonds are secured by the property financed and are payable solely from
payments received on the underlying mortgage loans. Their aggregate principal
amounts could not be determined; however their original issue amounts totaled
$310.2 million. Since 1997, the City has issued $83.8 million in various series of
housing revenue bonds that has an outstanding balance of $75.8 million as of
September 30, 2011.
Problems
P. 8-1
a. General or other governmental fund
(1)
No entry necessary
8-8
(2)
No entry necessary
(3)
Cash $8,000,000
Other financing sources—bond proceeds $8,000,000
To record issuance of bonds (in a capital projects fund)
Construction expenditures $1,000,000

Cash $1,000,000
To record construction costs (in a capital projects fund)
(4)
No entry is necessary to record the signing of the lease.
Rent expenditure $ 40,000

Cash $ 40,000
To record payment of rent
(5)
Fixed assets—expenditure $ 869,371

Other financing sources—capital lease $ 869,371
To record the acquisition of equipment under a capital lease
Debt service expenditure (lease principal) $ 87,838

Debt service expenditure (lease interest) 52,162
Cash $ 140,000
(6)
Nonreciprocal transfer-out $ 500,000

Cash $ 500,000
To record transfer from the general fund (to a debt service fund)
Cash $ 500,000
Nonreciprocal transfer-in $ 500,000
To record transfer to a debt service fund (from the general fund)
8-9
(7)
Cash $ 950,000
Tax anticipation notes payable $950,000
To record issuance of tax anticipation notes payable
(8)
Compensation expenditure $ 150,000

Cash $150,000
To record payment to teachers for compensated absences
b. Government-wide statements
(1)
Compensation expense $ 350,000

Liability for compensated absences $350,000
To record expenditure and liability for compensated absences
(2)
Claims and judgments—expense $3,000,000

Claims and judgments payable $3,000,000
(3)
Cash $8,000,000
To record the issuance of bonds
Construction in process $1,000,000

Cash $1,000,000
To record construction costs
(4)
Since this is an operating lease, no entry is necessary to record the signing of the lease.
Rent expense $ 40,000

Cash $ 40,000
To record payment of rent
(5)
Vehicles held under lease $ 869,371

Capital lease obligations $ 869,371
To record the acquisition of vehicles under a capital lease
8-10
Capital lease obligations (lease principal) $ 87,838

Cash $140,000
Amortization of leasehold $108,671

Vehicles held under lease $108,671
To record amortization of the lease for one year
(6)
No entry is necessary to reflect an internal transfer in governmental funds.
(7)
Cash $ 950,000
Tax anticipation notes payable $950,000
To record issuance of tax anticipation notes payable
(8)
Liability for compensated absences $ 150,000

Cash $150,000
To record payment to teachers for compensated absences
P. 8-2
1. Issuance of the bonds
Cash $6,627,909
Bond premium 627,909
To record the issuance of bonds (unrestricted resources)
The net liability (bonds payable plus premium) reflects the amount actually borrowed.
8-11
2. First payment of interest

Bond premium amortized 14,302
Cash $ 180,000
To record the first payment of interest (unrestricted resources)
Immediately following the first payment the effective liability would be reduced by the
amount of the premium amortized ($14,302) and would thereby be equal to $6,613,607.
The reported bond interest expense is equal to 2.5 percent (the yield rate) of $6,627,909
(the effective liability) — i.e., the effective interest rate times the effective liability. The
amount paid, by contrast, is equal to the 3 percent (the coupon rate) times $6,000,000 (the
face value of the debt).
3. Market value of bonds
Present value of 29 coupon payments (an annuity of

$180,000, discounted at 2 percent) $180,000 x $21.84438
(the present value of an annuity of $1) $3,931,989
Present value of principal payment (a single

sum of $6,000,000 discounted at 2 percent)
$6,000,000 x $0.56311 (the present value of $1) 3,378,674
Total $7,310,663
This amount would not appear on the statements of the district (either fund or
government-wide). It would be of interest to statement users because it indicates the
amount for which the bonds could be redeemed — the effective amount of the liability as
of the statement date. Further, when compared with the original issue price (or the market
value of a previous period), it shows whether, and the extent to which, the entity
benefited or was harmed by the change in interest rates. In this illustration, the district
would have been better-off either waiting to issue the debt or issuing the debt for only six
months. It would thereby have avoided locking itself into a rate of 5 percent, when it
could have waited and borrowed at a rate of 4 percent.
4. In its fund statements the district would not report the bond liability. It would report
the bond proceeds as an “other financing source.” It would report each period’s
interest expenditure as the amount actually due — i.e., an amount based on the
coupon rate. It would not take into account bond discounts or premiums.
8-12
P. 8-3
1. a. Assuming a take-out agreement (thereby qualifying the bonds as long-term
debt).
Cash $2,000,000
Other financing sources—bond proceeds $2,000,000
To record the bond proceeds (general fund or capital projects fund)
b. Assuming no take-out agreement (thereby requiring the bonds to be accounted

for as short-term, fund, liabilities).
Cash $2,000,000
To record the bond proceeds (general fund or capital projects fund)
2. Neither the specific bondholder needing cash nor other bondholders would redeem
their bonds. If they did not need immediate cash, they would have no incentive to
redeem the bonds since alternative investments of the same risk would be paying the
prevailing interest rate of 4 percent rather than the 7 percent they are now receiving.
If they did need immediate cash they would be better off selling the bonds in the
open market, inasmuch as the market price of the bonds would be considerably
higher than their par (redemption) value.
3. If interest rates had risen to 9 percent then all bondholders would be better off
redeeming their bonds. Those not needing the cash could invest their funds in other
bonds of comparable risk and thereby trade a 7 percent return for a 9 percent return.
4. If prevailing rates were 9 percent then the most likely rate charged by the financing
institution would be the same 9 percent.
5. The demand bonds provide the city with none of the benefits of a guaranteed long-
term interest rate. If interest rates were to rise, the city would have to redeem the
bonds and refinance the debt at the higher, prevailing rate. By contrast, the demand
bonds burden the city with the corresponding disadvantages of fixed long-term
interest rates. If interest rates were to fall, the city could not “call” the bonds at par
and refinance them at a lower interest rate. They are thereby locked into the fixed
rate when interest rates fall, but not when they rise. (On the other hand, because of
these disadvantages, the demand bonds probably would carry a much lower interest
rate than long-term bonds.)
8-13
P. 8-4
1. Inasmuch as the city actually refinanced the BANs, it should account for them as
long-term debt. Thus, the entry to record the debt in a governmental fund (e.g., a
capital projects fund) would be:
Cash $4.0
Other financing sources—proceeds from issuance of BANs $4.0
To record the issuance of BANs
2. If it did not actually refinance the BANs then it would have to demonstrate that it
entered into a financing agreement:
• that does not expire within one year of the balance sheet date and is non-
cancellable by the lender
• that has not been violated as of the balance sheet date and
• is capable of being honored by the lender.
If it is unable to do so it should report the debt as a current liability in a

governmental fund. Thus:
Cash $4.0
Bond anticipation notes payable $4.0
To record the issuance of BANs
3. TANs should always be reported as a current liability of a governmental fund,

irrespective of whether they have been rolled-over.
4. RANs should also be reported as a current liability of a governmental fund.
P. 8-5
1. These are conduit bonds. They should not be reported in the basic financial
statements. Note disclosure is sufficient.
2. Bond anticipation notes should be reported as current liabilities of both a

governmental fund (presumably a debt service fund) and government-wide statements
unless the city has already refinanced the notes or has entered into a financing
agreement to do so (something for which there is no evidence in this problem that the
city has done).
3. Inasmuch as the city has no obligation to repay the debt — and indeed is prohibited
from assuming the debt — it should not report it in its basic financial statements.
8-14
4. These are demand (put) bonds. Unless the city has entered into a take-out agreement
to refinance the bonds in the event that they have to be refunded and the agreement
satisfies certain criteria the — for which there is not evidence in this problem — it
should report the bonds as current obligations both in an appropriate fund and in
government-wide statements.
5. The debt of the school district is overlapping debt from the perspective of the city.
Overlapping debt should be reported as supplementary information in the statistical
section of its annual report.
P. 8-6
1. Acquisition of asset by lease (government-wide statements)
Building held under lease $5,000,000

Capital lease obligations $5,000,000
To record the acquisition of the building by lease
2. First lease payment and depreciation
Capital lease obligations (lease principal) $135,923

Cash $435,923
To record the first lease payment consisting of interest (6 percent of $5,000,000) and
principal
Depreciation (or amortization) expense $250,000

Accumulated depreciation—building held under lease $250,000
To record first year’s depreciation ($5 million divided by 20 years)
The second lease payment would differ from the first in that the interest would be based
on an obligation of $4,864,077 (the original obligation less the first payment of
principal). Correspondingly, the principal payment would increase by the same amount.
3. Key arguments that the lease constitutes long-term debt
1. The lease must be accounted for as debt under generally accepted accounting
principles. Hence, the accounting rule-making authorities, who are the experts
in such matters, consider it debt.
2. The transaction is clearly a ruse to avoid debt limitations. The lease agreement
slightly alters the form of what would otherwise be a conventional
purchase\borrow arrangement, but not the economic substance.
3. Despite the non-appropriation clause, the city cannot disavow its lease
obligations without seriously impairing its credit standing. Indeed, it pledged
to make a good faith effort to make the payments required of it.
8-15
4. In economic substance the city has assumed all risks and rewards of
ownership.
4. Key arguments that the lease does not constitute long-term debt
1. Accounting rules should not govern legal status, no more than legal status
should govern accounting rules; the two have different purposes.
2. The non-appropriation clause specifically states that the lease does not create a
binding obligation. The council must appropriate funds for each payment.
3. The mere probability that a government will make payments in the future does
not constitute a liability.
4. The definition of debt for purposes of debt limitations is elusive. After all,
even non-cancellable obligations, such as those arising from bonds (e.g., the
obligation for interest) and from service contracts (the obligation to continue to
take and pay for services) have not been considered debt for purposes of either
external financial reporting or debt limitations.
P. 8-7
1. The percentages of the debt applicable to the city were most likely derived by
dividing the assessed value of the property located within the city by the assessed
value of the property located within the other governments.
2. Direct and overlapping debt
Percentage
Net Debt Applicable City’s
Name of Government Unit Outstanding to City Share
City of Wyoming $ 22,863,510 100.00% $ 22,863,510
Kent County 125,653,951 13.40 16,837,629

Kent County Intermediate
School District 1,766,795 13.55 239,401
Wyoming Public Schools 3,956,922 99.24 3,926,849
Godwin Heights Public Schools 1,338,501 85.96 1,150,576
Kelloggsville Public Schools 2,363,037 61.97 1,464,374
Grandville Public Schools 10,734,809 13.58 1,457,787
Kentwood Public Schools 25,502,958 .55 140,266
Godfrey Lee Public Schools 3,204,362 100.00 3,204,362
Total direct and overlapping debt $ 51,284,754
8-16
3. Adjusted measures
Ratio of total net direct debt and overlapping debt to assessed value of property:
$51,284,754/$1,228,774,900 = 4.17%
Total net direct and overlapping debt per capita:
$51,284,754/64,500 = $795
4. The adjusted measures that include all debt (revenue bonds and overlapping debt)
are more than twice those that include only direct GO debt. The adjusted measures
may be of concern to statement users because they indicate the amount of debt that
must be paid by the population of the city. In assessing the debt-paying capacity of a
potential borrower, bankers would never consider merely the debt that a husband or
wife had outstanding. They would take into account the debt owed by the other
spouse for which he or she was jointly responsible. So too should the analyst take
into account the debt that city property-owners and residents owe because they are
part of other governments.
P. 8-8
1. The only amount that would be reflected on the district’s balance sheet is the present
value of the minimum lease payments — $1,818. The obligations for operating lease
payments would not be reported.
2. The amount representing interest is the difference between the total lease payments
and the present value of those payments. In other words, the present value of the
minimum lease payments is equal to the principal balance of the amount
“borrowed” by the district. The total minimum lease payments represent the
combined principal and interest payments (not taking into account the time value of
money).
3. Interest expense for 2014 would be 6.56 percent of the $1,818 lease liability. Thus:
Interest expense $119

Capital lease liability 637
Cash $756
To record the first lease payment
4. The operating lease payment would be recorded as an ordinary rent expense:
Rent expense $11,696

Cash $11,696
To record the first lease payment
8-17
5. Discounting each of the payments from 2014 through 2022 at a rate of 6.56 percent
(using a spreadsheet function) yields an obligation of $43,643. Although this
obligation does not qualify as a capital lease liability — and is therefore not reported
as a long-term liability — it is just as significant to a statement user as the debt
which is reported. The note indicates that the operating leases are not cancelable.
Therefore, they are as much of a commitment of resources as the reported liabilities.
P. 8-9
1. Compensated absences - general fund
Compensated absences - expenditures $ 29,700

Cash $ 29,700
To record the payments to employees for compensated absences earned by employees in
previous years (In the general fund the only amount that would be recognized would be
the actual payments to employees)
2. Compensated absences - government-wide statements
Compensated absences - expense $ 32,800

To record the amount earned by employees

Cash $ 29,700
To record the amount paid to employees for compensated absences earned in previous
years.
3. Issuance and retirement of debt - capital projects and debt service funds
Cash $ 121
Other finance sources - bond proceeds $ 121
To record the issuance of GO debt (capital projects fund)
Expenditure - payment of debt service principal $ 30,179

Cash $ 30,179
To record the repayment of GO debt (debt service fund)
4. Issuance and retirement of debt - government-wide statements
Cash $ 121
Bonds payable $ 121
To record the issuance of GO debt (capital projects fund)
8-18
Bonds payable $ 30,179

Cash $ 30,179
To record the repayment of GO debt (debt service funds)
5. The $47,000 addition represents the amount of pensions earned by employees but
not paid (i.e., contributed to the pension fund). The $53,500 reduction represents
pensions paid (i.e., distributed to retirees) during the current year but earned in prior
years and the current year.
6. The office lease is undoubtedly an operating lease. Hence, the lease payments would
not be capitalized. They would not be reported as a liability on either fund or
government-wide statements; they would not be shown on the schedule of changes
in long-term liabilities.
8-19
P. 8-10
1. Revised Legal Debt Margin for General Obligation Bonds
June 30
Value of assessed property (excluding certain

industrial and commercial properties) (note 1) $1,082,292,630
Debt limit — ten percent of assessed value 108,229,263
Amount of debt applicable to debt limit:

Total bonded debt (note 2) $63,442,000
Less:
Assets available for debt service (note 3) 1,970,453
Revenue bonds not subject to debt limitations (note 4) 8,025,000
9,995,453
Total amount of debt applicable to debt limitations 53,446,547
Legal debt margin $ 54,782,716
Note 1. 95 percent of $1,139,255,400

Note 2. $27,442,000 plus $36,000,000
Note 3. $1,770,453 plus $200,000
Note 4. $2,025,000 plus $6,000,000
2. Inasmuch as the lease satisfies the criteria of a capital lease, it would be reported as
a government-wide liability in the amount of $199,634 (the present value of 5
annual payments of $50,000 discounted at 8 percent). The service contract, by
contrast, would be recognized as a liability only as the services are actually
performed. Hence it would not be reported as a liability when the contract was
signed.
As widely recognized in accounting, capital leases are, in economic substance,

purchase/borrow transactions. Therefore, it has been argued (and many jurisdictions
have accepted the position) that the obligations under capital leases should be
subject to debt limitations just as if they were conventional borrowing arrangements.
On the other hand, it has been asserted that if a lease contains a non-appropriation
clause, the lessee is not legally bound to make the specified lease payments, and
therefore it should not be counted as debt.
Service contracts, while not recognized as long-term debts by accountants,

nevertheless obligate the government to make future payments. Therefore, if the
purpose of debt limitations is to protect governments from excessive commitments,
it can be argued they, like accounting liabilities, should be subject to the restrictions.
(Of course similar arguments can be made with respect to obligations for unaccrued
interest, salaries under employment contracts, and unaccrued rent. No jurisdictions
count those obligations as debts subject to limitation)
8-20
Another random document with
no related content on Scribd:
attention to the tremendous amount of work for which he was
responsible. He would not have had time for it; and with regard to my
documents I can only tell you that I do not remember any papers
from which such a conclusion might be drawn. What the General
committed to paper—and these papers, as I have seen myself, run
into thousands—was always strictly confined to military matters, and
in no way encroached upon the sphere of politics. To be more exact,
I do not remember in the course of those 2 years ever having seen in
my files any document of a political nature inspired by the Chief of
the Armed Forces Operations Staff or written by himself.
DR. JAHRREISS: Yes; but perhaps he was fond of the limelight
and had great ambitions; and perhaps, and outside of the files...
SCHRAMM: I can answer that question with a definite “no,”
because I know from his associates, and from conversations with
him, that all diplomatic procedure was repugnant to him and that he
disliked it because it had nothing to do with soldiers. I did not notice
any ambition, because if the General was ambitious he certainly had
chosen the least suitable position for such a purpose, since he thus
exposed himself to criticism from those below him—from people who
did not know the underlying reasons. From that time on he was
criticized a good deal, and he did not receive from higher quarters
the recognition he deserved. I always thought it peculiar, and even
grotesque, that the General, at the time of Adolf Hitler’s, death, had
scarcely more German war decorations than I had myself, as a mere
major in the reserve. I did not see whether he had foreign
decorations. I never saw him wearing a foreign order. At any rate,
there were no indications of ambition or of political aspirations.
DR. JAHRREISS: During this Trial there has been frequent
mention of a speech made by the General during the winter of 1943-
44 addressed to the Gauleiter. I do not know whether you know
anything about that speech.
SCHRAMM: Yes, I remember it exactly.
DR. JAHRREISS: What do you remember exactly?
SCHRAMM: First of all, let me tell you that the reason why I
remember it exactly is because I received the material on which the
speech was based. After it was no longer needed, it was given to me
for my War Diary. It was like this:
That was a speech for which material was collected in the
various departments. For this purpose an enormous map was
needed, which was difficult to prepare because it was larger than the
offices in which we were working. The speech was made at this
annual meeting in Munich on 8 or 9 November. The particular reason
for the General making a speech outside the usual military circle was
the following: Italy’s dropping out of the war in September 1943 had
led to a break in the Southern Front extending from Marseilles to
Athens, a distance of 4,000 km. We had succeeded in filling the gap
again, but a good deal of uneasiness was felt by all those who
understood the situation.
MR. ROBERTS: My Lord, I object to long reasons being given
for the speech being made. The speech is in evidence and, in my
submission, the reasons for the speech are entirely immaterial.
THE PRESIDENT: The Tribunal upholds the objection.
DR. JAHRREISS: Witness, please go on telling us about the
attack.
SCHRAMM: This was the one reason...
THE PRESIDENT: No, no, I said that the Tribunal upheld Mr.
Roberts’ objection as to what the witness must say. That’s a
mistranslation.
DR. JAHRREISS: It was a misunderstanding. I am sorry. It was
wrongly translated.
[Turning to the witness.] Witness, I want to show you a
document which was submitted to the Tribunal by the Prosecution 2
days ago, Document 1808-PS. Perhaps you will just look through the
whole of the document first.
[The document was submitted to the witness.]
THE PRESIDENT: Is it among the Jodl documents?
DR. JAHRREISS: No, it is a document which the Prosecution
submitted in the course of the cross-examination 2 days ago.
MR. ROBERTS: My Lord, that document was handed up
separately by me during the cross-examination, and I am afraid it is
not in the book. It is one of those documents which received a new
GB number, and was handed up loose towards the end of the cross-
examination, Document 1808-PS.
DR. JAHRREISS: Thank you. May I go on?
THE PRESIDENT: Go on, Dr. Jahrreiss.
DR. JAHRREISS: Witness, does your signature appear at the
foot of the second last page, on the right?
SCHRAMM: Yes. This is a file which I started after the attempt
of 20 July 1944, in order to have a permanent record of what was
being done in the Armed Forces Operations Staff. I want to add in
this connection that the Armed Forces Operations Staff was in no
way involved in that conspiracy. This copy presumably comes from
the war archives. The signature and the corrections are partly mine,
and partly those of my clerk.
DR. JAHRREISS: I want to draw your attention to Number 5 in
this file of documents.
SCHRAMM: Yes.
DR. JAHRREISS: It is dated 25 July. Do you have it?
SCHRAMM: Yes.
DR. JAHRREISS: Did you draw it up?
SCHRAMM: Yes, I drew it up myself.
DR. JAHRREISS: Please, will you tell us what the basis for this
work of yours was?
SCHRAMM: The officers of the staff were called to our mess hall
at short notice. We were told that the General wanted to address his
staff. As not all the officers were able to attend, I was ordered to take
notes, so that the other officers could be informed of what the
General had said. I remember clearly that I jotted down a few key
words, still standing, so this is not a shorthand record. I cannot write
shorthand. There was no time to find a stenographer.
DR. JAHRREISS: Well, did you base this on your notes?
SCHRAMM: Yes. Afterwards, probably on the following day, I
reconstructed the General’s speech as far as possible from my
notes. I am not certain, of course, if all the details are quite accurate,
because the notes which I had taken standing up were much too
sketchy for that. And, of course, I am particularly doubtful about the
accuracy of the actual words spoken. I now see that there are 4½
pages. The speech was, of course, very much longer than that. It is
therefore a compressed account.
DR. JAHRREISS: A compressed account only...
SCHRAMM: Yes.
DR. JAHRREISS: Now, I should like to know more about the
circumstances in which the General made that speech, the actual
words of which we do not possess. That was...
MR. ROBERTS: My Lord, it is my respectful submission—again
in the interests of saving time—to mention that these matters are all
very irrelevant. We know that an attempt was made on Hitler’s life,
and that Jodl addressed his staff. It is my submission that the
circumstances are not relevant at all.
DR. JAHRREISS: Mr. President...
THE PRESIDENT: The Tribunal hope you’ll do it briefly.
DR. JAHRREISS: Yes; thank you.
[Turning to the witness.] Witness, will you please be very brief
and quote the personal circumstances?
SCHRAMM: The General appeared on the scene with white
bandages around his head. We were all most surprised that he
should have recovered so quickly from the attempt considering that
he had been standing right next to the explosion. I must say that, at
that time, we were deeply impressed by the concentrated energy
with which he reappeared before his staff and by his moral attitude to
such an attempt.
DR. JAHRREISS: Thank you, Mr. President. I have no further
questions.
THE PRESIDENT: Do other defendants’ counsel want to ask
any questions?
[There was no response.]
Does the Prosecution want to?
MR. ROBERTS: My Lord, I have no questions.
THE PRESIDENT: The witness can retire.
DR. JAHRREISS: I have no further questions. May I now call
the next witness, General Winter?
[The witness Winter took the stand.]
THE PRESIDENT: Will you state your full name, please.
AUGUST WINTER (Witness): August Winter.
THE PRESIDENT: Will you repeat this oath after me: I swear by
God—the Almighty and Omniscient—that I will speak the pure truth
—and will withhold and add nothing.
[The witness repeated the oath in German.]
THE PRESIDENT: Will you sit down.
DR. JAHRREISS: Witness, did you take part in the beginning of
the Russian campaign?
WINTER: Yes, I took part as the first general staff officer of Field
Marshal Von Rundstedt’s army group.
DR. JAHRREISS: Witness, may I point out to you that I want
you to allow a small pause after my question and to speak in general
more slowly than you have just been doing.
WINTER: Yes.
DR. JAHRREISS: Can you tell me—since you had a very
responsible position—what was officially said to be Hitler’s reason, at
that time, for the German attack on the Soviet Union?
WINTER: The official reason, given to me at the time by my
commander and my chief, was that an attack from Soviet Russia
was to be expected shortly, and that this was therefore a preventive
measure.
DR. JAHRREISS: And then you experienced the first battles on
the frontier, did you not?
WINTER: Yes, in this staff.
DR. JAHRREISS: That was toward the south?
WINTER: It was in the Ukraine, Army Group South.
DR. JAHRREISS: Even after those first battles, you had a
certain amount of experiences and certain impressions of the
opponent, did you not?
WINTER: Yes.
DR. JAHRREISS: Were they, General, such impressions as to
confirm the official reason given, that of a preventive war?
WINTER: It was the uniform impression of the command of the
army group—including the commander, the chief, and the operations
department under my command—that the reason given for the
campaign was the true one. Our own impression at the time was that
we had hit on active preparations for an offensive campaign.
DR. JAHRREISS: But did you have the facts on which to base
this impression?
WINTER: We had a number of facts which confirmed that
impression, according to our ideas. I may state them briefly. First of
all, there was the strength of the troops we encountered which,
although I cannot give you figures now, was greater than the figures
mentioned in our marching orders. Then there was the extraordinary
deployment of troops, so near and like a front, which struck us, with
unusual large proportions of armored troops far exceeding anything
we had expected, and the deployment of a comparatively strong
group opposite the Hungarian border which we could not explain to
ourselves as a defensive force. One point is particularly significant;
the fact that during the first week we found that captured enemy
staffs were equipped with maps which covered a large area of
German or ex-Austrian territory which, again, did not seem in
keeping with purely defensive considerations. In addition we
observed a number of smaller things, not very important in
themselves.
DR. JAHRREISS: Witness, just now you spoke of evidence
which, in your opinion, was particularly significant—namely, the
finding of these maps which you described a few minutes ago. Why
is that particularly significant—more significant than the other things
you have mentioned?
WINTER: It is particularly noticeable that the units on the
Russian Front were equipped with maps covering much more than
the area which would normally be included in a defensive
reconnaissance area—even allowing for the fact that at the
beginning of a campaign such reconnaissance might go beyond the
enemy’s frontier.
DR. JAHRREISS: There has been mentioned in this courtroom
the fact that after marching into the Ukraine, our troops found
themselves faced with exceptional circumstances and difficulties in
certain Ukrainian cities. Have you any idea of what I mean?
WINTER: Yes, that is obvious. We encountered an enormous
number of these difficulties when we approached the Dnieper. I
imagine that you are referring to the matter of remote-controlled
explosions, or delayed-action explosions, which were carried out, as
it seemed, on a very large scale in our fighting zone in the Kiev-
Kharkov-Poltava area. They caused us a great deal of trouble, and
they forced us to adopt extensive countermeasures at the time.
DR. JAHRREISS: Do you know whether that applies to
Odessa?
WINTER: I heard that things were blown up in Odessa, but I
cannot give you details.
DR. JAHRREISS: Do you know the details about Kharkov?
WINTER: I know about Kharkov indeed, because something
happened there which caused us to adopt certain security measures.
In the battles along the west border of Kharkov which were rather
long and serious, a divisional staff with all its main material—I cannot
remember its number—was destroyed by a delayed-action explosion
of this kind. This caused orders to be issued for the carrying out of
special security searches in all buildings which had to be used for
accommodation of staffs and other authorities from that time on.
DR. JAHRREISS: Did you, Witness, actually handle a Russian
map, or see one, which indicated plans for such blowing-up
operations?
WINTER: No, I cannot remember seeing such a map.
DR. JAHRREISS: Now, another point. You said a few moments
ago that Field Marshal Von Rundstedt was your commanding officer.
Who was your chief?
WINTER: Infantry General Von Sodenstern.
DR. JAHRREISS: Now, another subject. If I remember correctly,
Field Marshal Von Rundstedt retired at that time or was dismissed; is
that right?
WINTER: When the attack on Rostock failed in November 1941
and permission to withdraw his leading units had been refused by
the OKH, Field Marshal Von Rundstedt sent a report to the OKH, to
the army to which we were subordinated, in which he said that if the
necessary confidence was not felt in his leadership, he must ask the
Führer to nominate a new commander for that army group. I have a
painfully accurate recollection of this incident, because I myself
drafted the telegram and the Field Marshal made that addition with
his own hand.
The telegram was dispatched in the evening, and Hitler’s
answer, relieving him of his post, arrived in the course of the same
night.
DR. JAHRREISS: So that his application was granted?
WINTER: The application was granted. But perhaps I may tell
you that there were repercussions later with Hitler. A few days
afterwards Hitler himself flew to Mariupol in order to obtain
information about the actual situation on the spot. On his homeward
flight, he visited Field Marshal Von Rundstedt’s Poltava headquarters
and had a discussion with him. In the course of this discussion, Hitler
—I cannot tell you for certain whether I witnessed this scene myself,
or whether the Chief Adjutant Oberst Schmundt told me about it
immediately afterwards—I repeat, there was a personal discussion in
the course of which Hitler again reproached the Field Marshal for
having put that alternative question, and said to him:
“In the future I do not intend to tolerate any such
applications to resign. When I have once made a decision
the responsibility is transferred to me. I myself am not in a
position to go to my superior, for instance, God Almighty,
and to say to him, ‘I am not going on with it, because I don’t
want to take the responsibility.’ ”
We considered, at the time, that that scene was of basic
importance, and I may add that, to judge from the orders later given
on that point, our impression was correct.
DR. JAHRREISS: Do you know, Witness, whether Hitler, at
some later date, altered his decision not to allow that in the future?
WINTER: No, he certainly did not alter his decision. Because, as
I know, there were two occasions, I believe, on which orders to that
effect were issued, forbidding resignations on the part of a
commander, or an officer in a leading position, on grounds of
unwillingness to assume responsibility.
DR. JAHRREISS: I now come to another point. If I am properly
informed, you were in the Armed Forces Operations Staff during the
later stages of the war, were you not?
WINTER: On 15 November 1944 I was called there to succeed
General Warlimont who had fallen ill; and I took over his functions on
15 November 1944. My appointment was dated from 1 December
1944.
DR. JAHRREISS: Witness, did you regularly attend the situation
discussions with the Führer?
WINTER: Yes, I was there on an average of 5 days out of 7
during the week.
DR. JAHRREISS: There has been a great deal of discussion
about these situation conferences in this courtroom, and a great
many events took place at them which are of importance for this
Trial; but up to now, no real picture has yet been presented to us of
what those situation discussions really were. Can you explain the
procedure of such a situation discussion with reference to its length
and the number of people present?
WINTER: The situation discussion was a permanent part of the
afternoon’s program, and was attended by a fairly large number of
people, while there was a second situation discussion at 2 o’clock in
the morning, of no importance to us here. In it, reports were made
only by the junior General Staff officers of the OKH for the Eastern
Front and of the Operations Staff of the OKW for the Western Front.
MR. ROBERTS: Mr. President, I have a submission again in the
interest of time. The Defendant Jodl gave evidence as to these
conferences, and no one put one word of cross-examination to
suggest that his evidence was not accepted. Therefore, I would like
to submit that this is pure repetition on a point which is not disputed.
THE PRESIDENT: The Tribunal do not wish to hear anything of
a general or detailed nature about these conferences unless there is
something in particular that you want to prove about them.
DR. JAHRREISS: Mr. President, so as to clarify matters, may I
ask at this time whether the objection raised by Mr. Roberts means
that in this case the rule applies that something which has not been
touched upon in cross-examination can be considered proved? I am
not sure whether I have made myself understood. The objection from
the prosecutor apparently is based on the supposition that
something has been heard...
THE PRESIDENT: I don’t think you need lay down any hard and
fast rules, but General Jodl gave general evidence about the nature
of these “situation conferences,” and he was not cross-examined on
it. It doesn’t seem at all necessary to go into the general nature of
these conferences with any other witness.
DR. JAHRREISS: Thank you.
[Turning to the witness.] Witness, it is possible in military life for
an officer to receive an order with which he does not agree, is it not?
WINTER: Yes.
DR. JAHRREISS: In that case, is it possible for him to put his
divergent opinion on record?
WINTER: In the German Army, if I remember rightly, such a
possibility existed from the time of Moltke. An order from Hitler which
came out in 1938—I think, in winter 1938-39—removed such a
possibility once and for all. An order was issued at the time
prohibiting even chiefs of general staffs and command authorities
from putting their divergent opinions on record.
DR. JAHRREISS: In order to avoid creating difficulties for the
interpretation, will you please explain the word “Aktenkundig”?
WINTER: According to that it was not possible to include in the
official files or in the war diaries of events kept by command staffs
any comments to the effect that the chief was not in agreement with
the decision or order of his superior.
DR. JAHRREISS: It was canceled?
WINTER: These possibilities existed previously, but since 1938
they no longer existed as they were done away with.
DR. JAHRREISS: Thank you, General, I am now going to have
a document shown to you, Document D-606, a document which the
Prosecution also submitted during cross-examination 3 days ago. I
am afraid I do not know the exhibit number. Perhaps it is...
MR. ROBERTS: Well, that’s the Number 3606. It’s Exhibit GB-
292, My Lord. I put it in separately in cross-examination, in their
book...
THE PRESIDENT: Go on, Dr. Jahrreiss.
DR. JAHRREISS: Witness, do you know this document?
WINTER: I am acquainted with the document. It has my file
reference number on it.
DR. JAHRREISS: Did you write it yourself?
WINTER: No, General Jodl wrote it personally. But I can see a
blank space under Figure 11. I do not know whether it is complete.
The document consists of a preliminary draft, which is not contained
here; but now that I have looked at it, I can see that it is dealt with in
the file copy from my quartermaster’s department. The third copy
must have been sealed and attached to the same records.
Immediately after the attacks on Dresden, when Hitler had
raised the question of leaving the Geneva Convention, this
preliminary draft was drawn up at my headquarters under the
responsibility of General Jodl, and the order stated that all angles
should be worked on which would prevent the Führer from coming to
such a decision—that is, of leaving the Geneva Convention. This
document was carefully worked out from the point of view of
international law and from the point of view of the psychological
effect on the enemy troops, as well as on our own at home. I myself
did it. The following day, my chief, General Jodl, received me. He
had this document, the contents of which I have not checked now,
and he told me that he was completely in agreement with this
negative treatment, but that he had felt obliged to work on the draft in
more detail, and bring it into line with the information he had from the
Navy and so formulate it tactically in such a way that would
guarantee its success with Hitler under all circumstances—for his
idea must not be allowed to be put into practice.
DR. JAHRREISS: Thank you, Mr. President. I have no further
questions.
THE PRESIDENT: Any other defendant’s counsel want to ask
questions?
DR. LATERNSER: Mr. President, may I ask whether the
prohibition regarding interrogation applies to this witness? And I want
to point out that this witness is a member of the indicted group of the
General Staff and of the OKW.
THE PRESIDENT: I do not know whether he is or not, but it
does not matter whether he is or not. You can question him before
the Commission. I mean, you can call him yourself before the
Commission.
DR. LATERNSER: I merely wanted to clarify the matter by
means of this question.
THE PRESIDENT: Yes, thanks. Dr. Laternser, if there is any
witness who is not residing in Nuremberg, you can have him kept for
the purpose of having him examined before the Commission if you
want to do so.
MR. ROBERTS: My Lord, I only want to ask one question.
[Turning to the witness.] You have told us that Germany
attacked the Soviet Union in breach of their Nonaggression Pact,
because Germany feared an attack from the Soviet Union.
WINTER: May I be more precise by saying that we, as General
Staff officers in the high command of an army group that was
deployed in the Ukraine, were given that reason by our commanding
officer. Whether politically...
MR. ROBERTS: Very good. We know now from the evidence in
this Court that Hitler decided, in July 1940, to attack the Soviet
Union; that on 18 December 1940—446-PS, it is Page 53 of Book 7
—that on 18 December Hitler stated that the Armed Forces must be
prepared to overthrow Soviet Russia in a single attack of lightning-
like speed. We know that the attack was not until 22 June. It does
not look as though the leaders of Germany were very much
frightened, does it, of Russia, or should we say the Soviet Union,
breaking the Nonaggression Pact.
THE TRIBUNAL (Mr. Biddle): Witness, you had to take
retaliation measures in the Ukraine, did you not?
WINTER: We did not undertake any reprisals—as far as the
troops were concerned—in the operational zone of the Ukraine; at
least, I have no recollection now of any such instances.
THE TRIBUNAL (Mr. Biddle): What measures did you take
against the resistance of the population?
WINTER: During the entire campaign in which Army Group
South was involved, there was no resistance by the population in the
operational zone in the Ukraine. Only in rear areas were there fights,
at that time, with struggling Russian troop units. A resistance on the
part of the population did not occur—as far as I know—until later
when the operational zone had already been limited in the rear, and
then there was resistance against political Reich commissioners.
THE TRIBUNAL (Mr. Biddle): Very well. You were not there at
that time?
WINTER: The command to which I belonged was withdrawn
from the front at the end of January, or in the early days of February
1943. The rear area lines were at the Dnieper at that time.
THE PRESIDENT: The witness can retire.
DR. EXNER: Mr. President, in conclusion I have only two
interrogatories to submit to the Tribunal; and I want to read a few
lines from one of them—something which was forgotten.
To begin with, the interrogatory, Exhibit AJ-8, Document Jodl-61,
an interrogatory of Waizenegger, which I herewith submit and beg
the Tribunal to take judicial notice of its contents. And then there is
Exhibit AJ-6, Document Jodl-59, an interrogatory of Brudermüller,
with reference to which I wish to make a similar request. Then, from
the last to be submitted, Exhibit AJ-12, Document Jodl-65, General
Greiffenberg’s statement, I should like to quote the important parts. It
is a question of the attack against Yugoslavia and the question of
whether or not, after the Simovic Putsch, Yugoslavia had already
taken up a position against us. This is in the third volume of my
document book on Page 211. The Simovic Putsch was over, and the
question was whether there was an immediate threat from
Yugoslavia at the time.
“Question: Is it a fact that Yugoslavia, immediately after the
coup d’état of the army, started to deploy her armies on all
her borders?
“Answer: I know only the front which was opposite the
German Twelfth Army, located at the Bulgarian border. Here
the Yugoslavs had deployed their armies at the border.
“Question: Is it a fact that the Army ‘List,’ of which you were
the commander at the time, had the order, before the coup
d’état in Yugoslavia, to respect strictly the neutrality of
Yugoslavia during the pending attacks on Greece, and that
not even supply trains should be dispatched through
Yugoslavian territory?
“Answer: I can testify that the strictest order had been given
to respect Yugoslavia’s neutrality.
“Question: Did you hear of any violations of this order?
“Answer: No.”
Gentlemen of the Tribunal, a number of interrogatories have not
yet come in. Whether we are going to get them or not, I do not know.
At any rate, I shall have to reserve to myself the right to submit them
later. Apart from that, I have completed my case.
THE PRESIDENT: On Monday the Tribunal will hear the case of
the Defendant Seyss-Inquart, will it not?
Very well, the Tribunal may adjourn.
[The Tribunal adjourned until 10 June 1946 at 1000 hours.]
ONE HUNDRED AND FIFTY-FIRST DAY
Monday, 10 June 1946
Morning Session
THE PRESIDENT: I call on counsel for the Defendant Seyss-
Inquart.
DR. STEINBAUER: Your Lordship, High Tribunal, I open the
defense case with the last words spoken by Dr. Schuschnigg as he
resigned from the Austrian Chancellorship on 11 March 1938: “God
protect Austria.”
It is a coincidence in history that at a time when the question of
the Anschluss is being discussed here with reference to the person
of Seyss-Inquart, the four Foreign Ministers are preparing the peace
treaties on the basis of the same events. May I, therefore, draw the
Tribunal’s attention to my documents on this matter and ask that I be
permitted to quote from them at somewhat greater length than I had
originally intended?
Now, with the permission of the Tribunal, may I begin with the
examination of the defendant as witness in his own defense.
[The defendant took the stand.]
THE PRESIDENT: Will you state your full name, please?
ARTHUR SEYSS-INQUART (Defendant): Arthur Seyss-Inquart.
THE PRESIDENT: Will you repeat this oath after me: I swear by
God—the Almighty and Omniscient—that I will speak the pure truth
—and will withhold and add nothing.
[The defendant repeated the oath in German.]
THE PRESIDENT: You may sit down.
DR. STEINBAUER: Witness, when and where were you born?
SEYSS-INQUART: I was born in 1892 in Iglau, situated in what
was up to now a German-speaking enclave in Moravia. Moravia, at
that time, was a crown province of the Austro-Hungarian Monarchy.
There and in the German-speaking enclave Olmütz, also in Moravia,
I lived until the age of 15, when with my parents I moved into the
vicinity of Vienna where I completed my studies at the Gymnasium
and the legal faculty of the University of Vienna. In August 1914 I
enlisted in the Army.
DR. STEINBAUER: Were you in the Army during the whole of
the war?
SEYSS-INQUART: Yes. I served with the Tyrolean Kaiserjäger
and saw fighting in Russia, Romania, and in Italy. On a furlough
during the war I passed my final examinations, and in 1917 I
received my doctor’s degree. I was wounded once, decorated
several times, three times for bravery in the face of the enemy.
DR. STEINBAUER: What impressions of importance for your
later life did you retain from the time of your youth?
SEYSS-INQUART: Relevant to my case is, I think, only the
experience of the struggle between the nationalities in Moravia,
between the Germans and the Czechs. The Germans in those days
were in favor of a unified Austrian state, while the Czechs pursued a
predominantly nationalistic policy. It is, however, not without
significance that a language compromise was agreed upon in
Moravia.
DR. STEINBAUER: What lasting impressions did you retain
from your service in the war?
SEYSS-INQUART: Apart from the experience of comradeship at
the front, I remember especially the discussion toward the end of the
war on the Fourteen Points of President Wilson.
DR. STEINBAUER: Their essential content being the people’s
right of self-determination?
SEYSS-INQUART: It was clear to us that the realization of those
Fourteen Points would mean the dissolution of the Austro-Hungarian
Monarchy. We Germans regarded it as at least a compensation that
in pursuance of this right of self-determination the German Erblande
(the domain of the Holy Roman Emperors) would be able to return to
the Reich from which they had been separated just 50 years before,
in 1866. Yes, these territories had been created by the German
Reich and had been part of it for 950 out of the 1,000 years of their
existence.
DR. STEINBAUER: What did you do after your return from the
war?
SEYSS-INQUART: I devoted myself to my legal profession. In
1921 I set up my own practice, which in time grew into a very
successful one.
DR. STEINBAUER: What of your political attitude? Were you a
member of any political party?
SEYSS-INQUART: I was not a member of any political party,
because I did not want to tie myself to partisan politics. I had good
friends in all parties, including the Christian Social and Social
Democratic Parties; but the party programs seemed to me rather
one-sided, too much designed for individual groups of the
community.
DR. STEINBAUER: Were you a member of any political clubs,
for instance, the Austro-German Volksbund?
SEYSS-INQUART: Yes, I was a member of the executive of the
Austro-German Volksbund, because the only political idea to which I
adhered after 1918 was Austria’s Anschluss with the German Reich.
I witnessed 12 November 1918, when the Provisional National
Assembly, in fulfillment of the right of self-determination, decided that
“Austria is a part of the German Republic.” Furthermore, the
Constitutional National Assembly repeated the decision 6 months
later. But the Treaty of St. Germain forbade the Anschluss.
Thereupon the various districts tried to hold plebiscites; in Salzburg
and the Tyrol 98 percent of those entitled to the vote were in favor of
the Anschluss. Dr. Schuschnigg describes these events in his book,
Three Times Austria.
The answer was a serious attempt to divide Austria among its
non-German neighbors; but they could not agree on the booty.
DR. STEINBAUER: Mr. President, may I at this point submit to
the Tribunal and refer briefly to several documents of my document
book? The first document, to which I have given the Document
Number Seyss-Inquart-1, is on Page 2 of the document book and
contains the proclamation of the German-Austrian deputies after the
collapse of the Austro-Hungarian Monarchy on 21 October 1918.
There the second sentence reads:
“The German-Austrian State claims the territorial jurisdiction
over the entire territory of German settlement areas,
especially in the Sudetenland. The German-Austrian State
will fight any annexation by other nations of territories which
are inhabited by German farmers, workers, and citizens.”
Then, as Document Number Seyss-Inquart-2, I should like to
submit—it is on Page 4 of the document book—the resolution which
the witness has already mentioned, passed by the Provisional
Austrian National Assembly on 12 November 1918, which says:
“German-Austria is a democratic republic. All public
authorities are installed by the people. German-Austria is a
part of the German Republic.”
The leader of the biggest national party of the time, Dr. Karl
Renner, explained the reasons for this law on 12 November and said
the following, which appears on Page 6 as Document Number
Seyss-Inquart-3:
“Our great people is in distress and misery, the people
whose pride it has always been to be called the people of
poets and thinkers, our German people of humanism, our
German people which loves all mankind is deeply bowed in
misery. But it is just in this hour in which it would be so easy
and convenient and perhaps also tempting to settle one’s
account separately and perhaps to snatch advantages from
the enemy’s ruse, in this hour our people in all provinces
wish to proclaim: We are one family and one people living
under a common fate.”
Then I come to Document Number Seyss-Inquart-4, which is on
Page 18...
THE PRESIDENT: Page 8, is it not?
DR. STEINBAUER: Page 18. I beg your pardon, yes, Page 8.
That refers to the plebiscite on 24 April 1921 in the Tyrol, when
145,302 voted for the Anschluss and 1,805 against it. On 18 May
1921, there were 98,546 votes for the Anschluss in the district of
Salzburg, and 877 votes against it.
Your Honors, while submitting the document, I said that I
maintain there were three component factors leading to the
Anschluss: First, the economic emergency which runs as a recurring
theme through the entire history of the period. Second, the disunity
among the democratic parties, resulting therefrom. Third, the attitude
of the rest of the world, particularly the big powers, toward our small
country.
Those thoughts are laid down in my document book, and I
should like now with reference to the economic emergency of that
time to submit as my next exhibit the speech of Prelate Hauser,
President of the Austrian Parliament. The speech, made on 6
September 1919, appears on Page 14 of my document book. As
President of the Parliament he suggested the acceptance of the
Peace Treaty of St. Germain, giving the following reason:
“The National Assembly has no choice. Country and people
need lasting peace which will open the world to them again
morally and economically and which can once again
procure work for the masses of our people at home and
abroad....”
Then in the second paragraph he says:
“It also has no other choice because our country depends
on the big powers for its supply of food, coal, and industrial
raw materials as well as in the re-establishment of its credit
and its currency.”
The same point of view was expressed by the two statesmen
Seipel and Schober. In Document Number Seyss-Inquart-17, Seipel,
regarded as the greatest Austrian statesman, said at that time:
“But we will never believe that the Central European
question is solved as long as the great state which virtually
makes up Central Europe, the German Reich, is not a party
to the solution.”
I shall now continue with the examination of the witness.
I want to ask you, Witness, do you still remember the time and
the conditions after 1927?
SEYSS-INQUART: On account of the economic situation which
you have just described, the League powers again and again forced
Austria to make so-called voluntary declarations renouncing the
Anschluss. This had repercussions in Austrian domestic politics. The
Austrians, who in 1918 had been resolved to have a democratic
parliamentary form of government, turned to radical ideas of an
authoritarian character.
DR. STEINBAUER: At that time a new party was formed. Which
one was that?
SEYSS-INQUART: Then there occurred the so-called Palace of
Justice fire, an uprising of the Marxists, which brought in its wake the
creation of the anti-Marxists Home Guard, a militant organization.
Thus uniforms were introduced into the political life of Austria. The
controversy between the Marxists and the anti-Marxists became ever
more marked. The only nonpartisan organization at that time was the
German-Austrian Volksbund, and the Anschluss idea was the only
political objective which still held all parties together. Around the year
1930—at least then it was first noticeable—the National Socialist
German Workers Party made its appearance.
DR. STEINBAUER: What impression did that Party make on
you, particularly with reference to the seizure of power in the Reich?
SEYSS-INQUART: I want to say quite openly that amidst
Austrian conditions the Party appeared somewhat strange. Uniforms
had, of course, already been introduced into politics by the
Republican Guard of the Marxists and the Home Guard, but in the
NSDAP even the actual political leaders wore uniforms and marched
in close formation. And also the kind of political intransigence which
they displayed was not in keeping with our customary political
thinking.
DR. STEINBAUER: But what then were the reasons for that?
SEYSS-INQUART: Well, let me say that the NSDAP did not
recognize any value in any other party and was never prepared to
co-operate with any other.
DR. STEINBAUER: Then, what positive successes did you think
the Party had gained in the Reich?

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Government and Not-for-Profit

Accounting Concepts and Practices 6th

Government and Not-for-Profit Accounting Concepts and

Government And Not-For-Profit Accounting Concepts And

Government And Not-For-Profit Accounting Concepts And

Core Concepts of Government and Not For Profit

Essentials of Accounting for Governmental and Not-for-

Essentials of Accounting for Governmental and Not for

Essentials of Accounting for Governmental and Not-for-

Introduction to Governmental and Not-for-Profit

Questions for Review and Discussion

7. Tax Anticipation Notes (TANs) and Revenue Anticipation Notes (RANs) or a

8. Overlapping debt refers to the obligations of property owners within a particular

9. Conduit debt represents bonds or similar instruments issued by a government on

Bond Interest expense $ 3,126

Bond Interest expense $ 3,131

2. Governmental fund statements

Bond Interest expenditure $ 3,000

Bond Interest expenditure $ 3,000

2. No entry would be necessary in a governmental fund to record the conversion of the

3. To adjust accounts assuming state was unable to convert

Other financing sources—proceeds

4. In the government-wide statements the BANs would be reported as a liability

1. Expenditure $ 6.6 Expense $ 7.7

2. Expenditure $ 0.5 Expense $ 0.0

3. Expenditure $ 10.0 Expense $ 20.0

4. Expenditure $ 0.0 Expense $ 0.0

5. Expenditure $ 4.0 Expense $ 3.0

Equipment held under lease $800,000

2. First payment of interest

Capital lease obligations (lease principal) $ 60,694

Depreciation expense $ 80,000

No liability or asset would be recognized. Each lease payment would be reported

Bond Interest expense $1,271,000

Bond Interest expense $1,274,000

The 2011 CAFR can be found at:

City of Austin FY 2011

management; derivative instruments-interest rate swaps; deferred credits and other

3. The summary of changes in long-term obligations (p. 64) indicates an increase in

Construction expenditures $1,000,000

No entry is necessary to record the signing of the lease.

Rent expenditure $ 40,000

Fixed assets—expenditure $ 869,371

Debt service expenditure (lease principal) $ 87,838

Nonreciprocal transfer-out $ 500,000

Compensation expenditure $ 150,000

Compensation expense $ 350,000

Claims and judgments—expense $3,000,000

Construction in process $1,000,000

Rent expense $ 40,000

Vehicles held under lease $ 869,371

Capital lease obligations (lease principal) $ 87,838

Amortization of leasehold $108,671

No entry is necessary to reflect an internal transfer in governmental funds.

Liability for compensated absences $ 150,000

2. First payment of interest

Bond Interest expense $ 165,698

3. Market value of bonds

Present value of 29 coupon payments (an annuity of