When only a part of a debt issue is to be repaid from a proprietary fund's resources, how should that portion be reported?

When a portion of a debt issue is being repaid from a proprietary fund's resources, it is essential to accurately represent that specific liability in the financial statements. Reporting only the repaid portion as proprietary fund debt is correct because it aligns with the accounting principles governing proprietary funds. Proprietary funds are used to account for activities that operate similarly to private-sector businesses, and they should reflect only the assets and liabilities that pertain specifically to those funds.

By reporting only the repaid portion, the financial statements provide clarity regarding the obligations tied directly to the proprietary fund's resources. This approach ensures that the proprietary fund's balance sheet remains an accurate representation of its financial position, enabling stakeholders to understand the extent of the liabilities being managed by that fund.

This selective reporting allows the proprietary fund to acknowledge its obligations while concurrently reflecting the fact that not all debt related to the issue is managed within that fund, maintaining transparency and accountability in financial reporting.