05-31-05 - Laserfiche WebLink

Home Browse Search

r I I ( ff.. I! !1 u 1 i n U fl l: I [~ [: ! : L I ( I . CITY OF ARDEN IDLLS. MlNNESOT A NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2004 Nntel: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED c. Measurement Focus, Basis of Accounting and Financial Statement Presentation The government-wide fmandal statements are reported using the economic resources measurement focus and the accrual basis of accounting, as are the proprietary fimd and fiduciary fimd fmancial statements. Revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. Property taxes are recognized as revenues in the year for which they are levied. Grants and similar items are recognized as revenue as soon as all eligibility requirements imposed by the provider have been meL Governmental fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Revenues are recognized as soon as they are both measurable and available. Revenues are considered to be available when they are collectible within the current period or soon enough thereafter to pay liabilities of the current period. For this purpose, the City considers revenues to be available if they are collected within 60 days of the end of the current fiscal period. Expenditures generally are recorded when a liability is incurred, as under accrual accounting. However, debt service expenditures, as well as expenditures related to compensated absences and claims and judgments, are recorded only when payment is due. Property taxes, franchise taxes, licenses and interest associated with the current fiscal period are all considered to be suscepl1ble to accrual and so have been recognized as revenues of the current fiscal period, Only the portion of special assessments receivable due within the current fiscal period is considered to be susceptlble to accrual as revenue of the current period. All other revenue items are considered to be measurable and available only when cash is received by the City. Revenue resnlting from exchange transactions, in which each party gives and receives essentially equal value, is recorded on the accrua1 basis when the exchange takes place. On a modified accrua1 basis, revenue is recorded in the year in which the resources are measurable and become available. Non-exchange transactions, in which the City receives value without directly giving equal value in return, inclnde property taxes, grants, entitlement and donations_ On an accrual basis, revenue from property taxes is recognized in the year for which the tax is levied. Revenue from grants, entitlements and donations is recognized in the year in which all eligibility requirements have been satisfied. Eligibility requirements include timing requirements, which specify the year when the resources are required to be used or the year when use is first permitted, matching requirements, in which the City must provide local resources to be used for a specified purpose, and expenditure requirements. in which the resources are provided to the City on a reimbursement basis. On a modified accrual basis, revenue from non-exchange transactions must also be available before it can be recognized. Deferred revenue arises when assets are recognized before revenue recognition criteria have been satisfied. Grants and entitlements received before eligIoility requirements are met are also recorded as deferred revenue. On the modified accrual basis, receivables that will not be collected within the available period have also been reported as deferred revenue in the fimd financial statements. The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and asswnptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates. -19-