How is a pass-through capital grant, intended for another government, classified in the statement of activities?

A pass-through capital grant intended for another government is classified as program revenues - operating grants and contributions in the statement of activities. This classification is appropriate because the grant serves to support specific programs or activities undertaken by the receiving government, thereby directly affecting the scope and operations of those programs.

Capital grants typically assist with funding long-term assets or projects that can enhance governmental programs and services. When a government receives such a grant and subsequently passes it through to another governmental entity, it is done so to support specific purposes outlined in the grant agreement, which aligns with the characteristics of operating grants and contributions.

By categorizing it as program revenues, the statement of activities accurately reflects the nature of the funding as it pertains to specific functions of the government, rather than general funding that might be used broadly across various departments and initiatives. This detailed classification ensures transparency and clarity in how governmental funding flows and is utilized within specific community programs.