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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 /> ' Special Assessments <br /> Special assessments represent the financing for public improvements paid for by benefiting property owners. <br /> These assessments are recorded as receivable upon certification to the County. Special assessments are <br /> 1 recognized as revenue when they are received in cash or within 60 days after year end.All special assessments <br /> receivable are offset by a deferred revenue liability. <br /> Receivables and Payables <br /> tTransactions between funds that are representative of lending/borrowing arrangements outstanding at the end of <br /> the fiscal year are referred to as either"interfund receivables/payables"(i.e.,the current portion of interfund <br /> loans)or"advances to/from other funds"(i.e.,the non-current portion of interfund loans). All other outstanding <br /> balances between funds are reported as"due to/from other funds". <br /> Inventories and Prepaid Items/Deferred Charges <br /> ' The inventories are stated at the lower of cost or market on the first-in,first-out(FIFO)method. <br /> Certain payments to vendors reflect costs applicable to future accounting periods and are recorded as prepaid <br /> items or deferred charges. <br /> Fixed Assets <br /> ' Fixed assets used in governmental fund types of the City are recorded in the general fixed assets account group at <br /> cost or estimated historical cost if purchased or constructed. Donated fixed assets are recorded at their estimated <br /> fair value at the date of donation.Assets in the general fixed assets account group are not depreciated. Interest <br /> incurred during construction is not capitalized on general fixed assets. <br /> Public domain(infrastructure)general fixed assets(e.g.,roads,bridges,sidewalks and other assets that are <br /> immovable and of value only to the City)are not capitalized. <br /> The cost of normal maintenance and repairs that do not add to the value of the asset or materially extend assets' <br /> lives are not included in the general fixed assets group or capitalized in the proprietary funds. <br /> Property,plant and equipment in the proprietary funds of the City are recorded at cost. Property,plant and <br /> 1 equipment donated to these proprietary fund type operations are recorded at their estimated fair value at the date <br /> of donation. <br /> Major outlays for capital assets and improvements are capitalized in proprietary funds as projects are constructed. <br /> ' Interest incurred during the construction phase of proprietary fund fixed assets is reflected in the capitalized value <br /> of the asset constructed,net of interest earned on the invested proceeds over the same period. <br /> Property,plant and equipment are depreciated in the proprietary funds of the City using the straight-line method <br /> over the following estimated useful lives: <br /> Estimated <br /> ' Assets Useful Lives <br /> Furniture and equipment 5- 10 years <br /> Sewer and collection system 80 years <br /> Water distribution system 100 years <br /> -13- <br />