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05-26-2020-R
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05-26-2020-R
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<br />-28- <br />NOTE 1 – SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) <br /> <br />In the case of the initial capitalization of general infrastructure assets (i.e., those reported by governmental <br />activities), the City chose to include items dating back to June 30, 1980. These assets are reported at <br />historical cost. The City estimated historical cost for the initial reporting of these assets through back <br />trending (estimating the current replacement cost and utilizing an appropriate price -level index to deflate <br />the cost to the acquisition year). As the City constructs or acquires additional infrastructure assets each <br />period, they will be capitalized and reported at historical cost. <br /> <br />Capital assets are recorded in the government-wide and proprietary fund financial statements, but are not <br />reported in the governmental fund financial statements. Interest incurred during the construction phase of <br />capital assets of business-type activities is included as part of the capitalized value of the assets <br />constructed. <br /> <br />Property, plant, and equipment of the City is depreciated using the straight-line method over the following <br />estimated useful lives: <br /> <br />Buildings and structures 7–40 years <br />Infrastructure and improvements 15–50 years <br />Distribution and collection systems 15–50 years <br />Machinery and equipment 5–15 years <br />Office furniture and equipment 5–10 years <br />Vehicles 7–20 years <br /> <br />Land and construction in progress are not depreciated. <br /> <br />N. Compensated Absences <br /> <br />It is the City’s policy to permit employees to accumulate earned, but unused annual leave and sick pay <br />benefits called personal time off (PTO). All PTO is accrued when incurred in the government-wide and <br />proprietary fund financial statements. PTO is payable when used or upon termination of employment. A <br />liability for these amounts is reported in the governmental funds only if they have matured, for example, <br />as a result of employee resignations and retirements. A liability is recognized for that portion of <br />accumulated PTO benefits that is vested as severance pay. PTO is payable when used and, in some cases, <br />upon termination of employment. For regular employees, PTO is payable upon retirement or involuntary <br />termination up to the amount accrued, not to exceed 240 hours , who have served at least 12 consecutive <br />months prior to separation, and have given the City at least two weeks’ notice prior to the effective date of <br />such separation. The recorded portion of PTO (compensated absences) represents the estimated amount <br />expected, based on previous years’ history and those eligible for retirement, to be paid at separation. <br /> <br />O. Long-Term Obligations <br /> <br />In the government-wide and proprietary fund financial statements, long-term debt and other long-term <br />obligations are reported as liabilities. Bond premiums and discounts, if material, are deferred and <br />amortized over the life of the bonds using the straight-line method. Bond issuance costs are expensed in <br />the period incurred. <br />
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