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<br />. <br /> <br />CITY OF ARDEN HILLS, MINNESOTA <br />RECONCILIA nON OF THE STATEMENT OF REVENUES, EXPE1>-lJ)ITIJRES <br />A1>-lJ) CHANGES IN FUND BALANCES TO <br />GOVERNMENT <br />FOR THE YEAR ENDED DE <br /> <br />IDS <br /> <br />Total net change in fund balances - governmental funds <br /> <br />"DRAFT, <br /> <br />9,439) <br /> <br />Amounts reported for governmental activities in the statement <br />of activities are different because: <br /> <br />Capital outlays are reported in governmental funds as expenditures. However, in the statement of <br />activities, the cost of those assets is allocated over the estimated usefulljves as depreciation <br />expense. <br />Capital outlay <br />Depreciation expense <br /> <br />1,079,410 <br />(365,384) <br /> <br />Governmental funds report a gain (loss) on sale of capital assets to the extent of cash exchanged, <br />whereas the the disposition of the assets book value is included in the total gain (loss) in the <br />the statement of activities. <br /> <br />(521,792) <br /> <br />. <br /> <br />The issuance of bonds provides current financial resources to governmental funds, <br />while the repayment of the principal oflong-tenn debt consumes the current financial <br />resources of governmental funds. Neither transaction has any effect on net assets. <br />Also, governmental funds report the effect of issuance costs, premiums discounts, <br />and similar items when debt is first issued, whereas these amounts are deferred and <br />amortized in the statement of activities. The amounts below are the effect of these <br />differences in the treatment oflong-term debt and related items. <br />Amortization of bond discount <br />Principal repayments <br /> <br />(2,883) <br />2,545,000 <br /> <br />Interest on long-term debt in the statement of activities differs from the amount reported in the <br />governmental funds because interest is recognized as an expenditure in the funds when it is due, <br />and thus requires the use of current financial resources. In the statement of activities, however <br />interest expense is recognized as the interest accrues, regardless of when it is due. <br /> <br />29,006 <br /> <br />Certain revenues are recognized as soon as it is earned. Under the modified accrual <br />basis of accounting certain revenues cannot be recognized until they are available <br />to liquidate liabilities of the current period. <br />Special assessments <br />Property taxes <br /> <br />335,691 <br />(42,039) <br /> <br />Some expenses reported in the statement of activities do not require the use of current <br />financial resources and, therefore, are not reported as expenditures in governmental funds. <br />Compensated absences <br /> <br />9,804 <br /> <br />Change in net assets - governmental activities <br /> <br />$ 1,077,374 <br /> <br />. <br /> <br />The notes to the financial statements are an integral part of this statement. <br /> <br />-12- <br />