CCP 01-13-1992 - Laserfiche WebLink

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. l . CITY OF ARDEN HILLS MEH:IlANOOM I:WrE: January 9, 1992 TO: Mayor and City council Gary R. Berger, City Mministrator FRCM: TJ swanson, city 1lcOOUntant 1 SUBJEX:T: Depreciation ExpenSe On Wednesday, January 8, 1992, eouncilmember Paul Malone, City Administrator, Gary Berger and myself met at city Hall to discuss questions which Paul Malone rose at the January 2 Council Meeting in regards to adopting the propose:i 1992 Budget. The attached corrected pages are the result of this meeting. MI:". Malone suggested, that the narrative reflect the change in policy of including depreciation expenses rather than capital equipment expenses within the Water and Sanitary Sewer Enterprise budgets. (see #420 in the narrative). . Mr. Malone also suggested, beginning in 1993, equipment to be purchased which costs less than $2,000 be expended to #215 - Shop Tools and SUpplies rather than being capitalized in the Capital OUtlay area of the hldget. This change has also been noted in the narrative. Both Mr. Malone and myself have sp::lke with the City Auditor, Gary Groen of Al:xio, Al:xio and Eick. All parties have agreed to leave the depreciation expense in the water and sanitary sewer budgets, with the addition of a couple of more lines to generate an additional total for cash requirements. In doing so, this accomplishes two things. First, the expenditures total shows the cost of operations of the fundi while second, the cash requirement total shows the cash flCM needs of the fund. The fOllCMing paragraphs are a discussion of depreciation expense and hCM this expense relates to Enterprise funds and the General Fund. The depreciation expense has been included in the 1992 Enterprise Budgets for the Water Fund and Sanitary Sewer Fund instead of the expense f= capital equipment due to the definition of enterprise funds. The definition of an enterprise fund is to a==t for operations that are financed and operated in a manner similar to private hlsiness where the intent of the governing body is that the costs (expenses including depreciation) of providing goods or services to the public on a continuing basis be financed prinarily through user charges. Fixed -.- assets must be a=unted for along with =ent assets within an - .... enterprise fund because the fixed assets are used directly in the production of goods or services provided and sold by enterprises.