What must be eliminated in preparing the government-wide statement of net assets?

In preparing the government-wide statement of net assets, the liability for earned but unavailable deferred revenue must be eliminated because this type of deferred revenue arises when revenues have been earned based on eligibility requirements but are not available for immediate spending. This situation typically occurs when the revenue has been recognized under the accrual basis of accounting but still cannot be used until specific conditions are met, often tied to timeframes or spending restrictions.

The elimination of this liability reflects the transition from fund accounting, which focuses on current financial resources, to government-wide accounting, which presents a broader view of the government's overall financial position. By removing this deferred revenue liability, the government-wide statements provide a clearer representation of assets that are truly available for governmental services and obligations, allowing for a more accurate assessment of net assets.

The other options involve different aspects of financial reporting. Accrued liabilities represent obligations that are due and should be included in the statement. Annual revenues are recognized in the period they are earned and do not require elimination. Deferred charges for debt issuance costs are recognized as an asset amortized over the life of the debt rather than being eliminated, as they reflect costs that should be accounted for in the overall financial picture.