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<br />. <br /> <br />. <br /> <br />. <br /> <br />Nntel: <br /> <br />CITY OF ARDEN HILLS, MINNESOTA <br />NOTES TO FINANCIAL STATEMENTS <br />DECEMBER 31, 2003 <br /> <br />SUMMARY OF SlGN1F1CANT ACCOUNTlNG rOUClES - CONTlNUED <br /> <br />Fixed Assets <br /> <br />Fixed assets used in govennnental fund types of the City are recorded in the general fixed assets account group at <br />cost or estimated historical cost jf 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 /> <br />Public domain (infrastructure) general fIxed assets (e.g., roads, bridges, sidewalks and other assets that are <br />immovable and of valne only to the City) are not capitalized. <br /> <br />'rhe 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 /> <br />Property, plant and equipment in the proprietary funds of the City are recorded at cost. Property, plant and <br />equipment donated to these proprietary fund type operations arc recorded at their estimated fair value at the date <br />of donation, <br /> <br />Major outlays for capital assets and improvements are capitalized in proprietary fimds 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 /> <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 /> <br />Assets <br /> <br />Lives <br />in <br />Years <br /> <br />Furniture and equipment <br />Sewer and collection system <br />Water distribution system <br /> <br />5 - 10 <br />40 - 80 <br />40 -100 <br /> <br />Compensated Absences <br /> <br />Employees with at least ten years of service are entitled to receive one-third of their unused sick leave up to a <br />maxlmmn of 800 hours upon termination in addition to any unused vacation and compensatory time. <br /> <br />The accmal of these benefits is recorded as a liability in the enterprise fimds and expensed. The accrual in the <br />enterprise funds was $47,348 and $26,997 at December 31, 2003 and 2002, respectively. The liability for the <br />governmental fimds is recorded in the gcnerallong.tenn debt accotmt group and recorded as an expenditure when <br />paid. The liability in the general long-term account group was $78,679 and $75,724 at December 31, 2003 and <br />2002, respectively, <br /> <br />Long-term Obligations <br /> <br />The City reports long-term debt of governmental funds at face value in the general long-term debt .account group. <br />Long-term debt and other obligations fmanced by proprietary funds are reported as liabilities in the appmpriate <br />funds. <br /> <br />For governmental fund types, bond premiums and discounts, as wen as issuance costs are recognized during the <br />current period. Bond proceeds are reported as another fmancmg source net of the applicable premium or <br />discount. Issuance costs, other than those withheld from the actual net proceeds received, are reported as debt <br />service expenditures. For proprietary fund types, bond discounts arc deferred and amortized over the life of the <br />bonds using the straight-line method. <br /> <br />-15- <br />