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rJ ! , Ii. 11 II 1"1 11 I" i1 [] [1 D. u u u [] u IJ u. u 11 LJ CITY OF ARDEN HILLS, MINNESOTA RECONCILIA DON OF THE STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES (DEFICITS) TO THE STATEMENT OF ACTIVITIES GOVERNMENTAL FUNDS FOR THE YEAR ENDED DECEMBER 31,2004 Total net change in fimd balances - governmental fimds Amounts reported for governmental activities in the statement of activities are different because: Capital outlays are reported in governmental fimds as expenditures. However in the statement of activities, the cost of those assets is allocated over the estimated useful lives as depreciation expense. Capital outlay Depreciation expense The issuance of bonds provides current financial resources to governmental funds. while the repayment of the principal oflong-term debt consumes the current financial resources of governmental funds. Neither transaction has any effect on net assets. Also. governmental funds report the effect of issuance costs, premiums discounts. and similar items when debt is first issued, whereas these amounts are deferred and amortized in the statement of activities. The arnouots below are the effect of these differences in the treatment oflong-term debt and related items. Debt issued Less bond issuance costs Principal repayments Interest on long-term debt in the statement of activities differs from the amount reported in the governmental funds because interest is recognized as an expenditure in the funds when it is due, and thus requires the use of current financial resources, In the statement of activities, however interest expense is recognized as the mterest accrues, regardless of when it is due. Delinquent receivables will be collected this year, but are not available soon enough to pay for the current period's expenditures, and therefore are deferred in the fimds. Special assessments Property taxes Certain assets of the Enterprise fimds were purchased by governmental fimds. The expense is recorded in the fund statements by the govenunental funds, however a transfer is sho'ND. in the government-wide statements to record the asset in the business-type activities. Some expenses reported in the statement of activities do not require the use of current financial resources and, therefore, are not reported as expenditures in governmental funds. Compensated absences Change in net assets - governmental activities The notes to the financial statements are an integral part of this statement. -11- $ 930,856 1,326,527 (358,069) (2,395,000) 28,832 170,000 (9,509) (41,963) 15,562 (30,762) (14,480) $ (378,006)