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CITY OF ARDEN HILLS,MINNESOTA <br /> NOTES TO FINANCIAL STATEMENTS <br /> DECEMBER 31,2000 <br /> Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES-CONTINUED <br /> The Special Revenue funds account for revenue sources that are legally restricted to expenditures for specified <br /> purposes(not including major capital projects). <br /> The Debt Service funds account for the servicing of general long-term debt not being financed by proprietary <br /> funds. <br /> The Capital Projects funds account for the acquisition of fixed assets or construction of major capital projects <br /> not being financed by proprietary funds. <br /> Proprietaryfunds are accounted for on the flow of economic resources measurement focus and use the accrual <br /> basis of accounting. Under this method,revenues are recorded when earned and expenses are recorded at the <br /> time liabilities are incurred. The City applies all applicable FASB pronouncements issued on or before <br /> November 30, 1989 in accounting and reporting for its proprietary operations. Proprietary funds include the ' <br /> following fund type: <br /> Enterprise funds and used to account for those operations that are financed and operated in a manner similar to <br /> private business or where the Council has decided that the determination of revenues earned,costs incurred <br /> and/or net income is necessary for management accountability. <br /> Account Groups. The general fixed assets account group is used to account for fixed assets not accounted for in <br /> proprietary funds. The general long-term debt account group is used to account for general long-term debt and <br /> certain other liabilities that are not specific liabilities of proprietary funds. <br /> C. Assets,Liabilities and Equity ' <br /> Deposits and Investments <br /> The City's cash and cash equivalents are considered to be cash on hand,demand deposits and short-term Of <br /> investments with original maturities of three months or less from the date of acquisition. <br /> State statutes authorize the City to invest in obligations of the U.S.Treasury,commercial paper,corporate bonds, <br /> repurchase agreements and shares of investment companies registered under the Federal Investment Company <br /> Act of 1940 and whose only investments are obligations guaranteed by the United States or its agencies. <br /> Investments are stated at fair value. Earnings on investments are allocated to the individual funds based upon the <br /> average of month-end cash and investment balances. ' <br /> Property Taxes <br /> The Council annually adopts a tax levy and certifies it to the County for collection. The County is responsible for <br /> collecting all property taxes for the City. These taxes attach an enforceable lien on taxable property within the <br /> City on January 1 and are payable by the property owners in two installments. The taxes are collected by the <br /> County Auditor-Treasurer and tax settlements are made to the City during January,July and December each <br /> year. <br /> Taxes payable on homestead property,as defined by State statutes,are partially reduced by a homestead and <br /> agricultural credit aid. The credit is paid to the City by the State of Minnesota in lieu of taxes levied against <br /> homestead property. The State remits this credit in two equal installments in July and December each year. <br /> Delinquent taxes receivable include the past six years'uncollected taxes. Delinquent taxes have been offset by a <br /> deferred revenue liability for delinquent taxes not received within 60 days after year end. <br /> -12- ' <br />