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<br /> ---.-..-- <br /> CITY OF ARDEN HILLS, MINNESOTA I <br /> NOTES TO FINANCIAL STATEMENTS <br /> DECEMBER 3 I, ] 997 I <br /> Note I: . <br /> SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED <br /> Special Assessments I <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 I <br /> 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 I <br /> Transactions 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 I <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 I <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 I <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 I <br /> at cost or estimated historical cost if purchased or constructed. Donated fixed assets are recorded at their <br /> estimated fair value at the date of donation. Assets in the general fixed assets account group are not depreCiate. I <br /> Interest incurred during construction is not capitalized on general fixed assets. <br /> Public domain (infrastrucrnre) 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. I <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. Propelty, plant and I <br /> 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 I <br /> constructed. Interest incurred during the construction phase of proprietary fund fixed assets is reflected in the <br /> capitalized value of the asset constructed, net of interest earned on the invested proceeds over the same period. I <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 I <br /> Assets Useful Lives <br /> Furnimre and equipment 5 - 10 years I <br /> Sewer and collection system 80 years <br /> Water distribution system 100 years <br /> I <br /> . I <br /> -12- I <br />