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CCP 05-15-2006
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CCP 05-15-2006
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11/15/2006 10:10:06 AM
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<br />. Note 1: <br /> <br />. <br /> <br />. <br /> <br />CITY OF ARDEN HILLS, MINNESOTA <br />NOTES TO THE FINANCIAL STATEMENTS <br />DECEMBER 31 2005 <br /> <br />SUMMARY OF SIGNIFICANT ACCOUNTING POLIC S - CONTINUED <br /> <br />c. M~=,_' '"'0' B,.;o"' 'tt.O"", m' -"",-, ft' F I <br /> <br />The government-WIde fmanclaJ statements are reported ul 0 rc easureme ""-us d the <br />accrual basis of accounting, as are the proprietary fund t:d=~~ fmanciaJ statements, Revenues lre <br />recorded when earned and expenses are recorded when a. ill. __". .ed.~rp.o-51r-dJess"ofjhF Jimim:r "of.r..e1lted cash <br />flov.rs. Property taxes are recognized as revenues in the year for which they are levied. Grants and similar items are <br />recognized as revenue as soon as all eligibility requirements imposed by the provider have been met. <br /> <br />Governmental fund financial statements are reported using the current financial resources measurement focus and <br />the modified accrual basis of accounting. Revenues are recognized as soon as they are both measurable and <br />available. Revenues are considered to be available when they are collectible vritbin the elUTent period or soon <br />enough thereafter to pay liabilities of the current period. For this purpose, the City considers revenues to be <br />available if they are collected within 60 days of the end of the cmrent fiscal period, Expenditures generally are <br />recorded when a liability is incurred, as under accrual accounting. However) debt service expenditures, as well as <br />expenditures related to compensated absences and claims and judgments, are recorded only when payment is due. <br /> <br />Property taxes, franchise taxes, licenses and interest associated 'With the current fiscal period are all considered to be <br />susceptible to accrual and so have been recognized as revenues of the current fiscal period. Only the portion of <br />special assessments receivable due 'Within the current fiscal period is considered to be susceptible to accrual as <br />revenue of the current period. All other revenue items are considered to be measurable and available only when cash <br />is received by the City. <br /> <br />Revenue resulting from exchange transactions, in which each party gives and receives essentially equal value, is <br />recorded on the accrual basis when the exchange takes place. On a modified accrual basis, revenue is recorded in the <br />year in which the resources are measurable and become available. <br /> <br />Non-exchange transactions, in which the City receives value without directly giving equal value in return, include <br />property taxes, grants, entitlement and donations. On an accrual basis, revenue from property taxes is recognized in <br />the year for which the tax 1S levied. Revenue from grants, entitlements and donations is recognized in the year in <br />wIllch all eligibility requirements have been satisfied, Eligibility requirements include timing requirements, wIllch <br />specify the year when the resources are required to be used or the year when use is first permitted, matching <br />requirements, in which the City must provide local resources to be used for a specified purpose, and expenditure <br />requirements, in which the resources are provided to the City on a reimbursement basis. On a modified accrual <br />basis, revenue from non-exchange transactions must also be available before it can be recognized. <br /> <br />Deferred revenue arises when assets are recognized before revenue recognition criteria have been satisfied. Grants <br />and entitlements received before eligibility requirements are met are also recorded as deferred revenue. On the <br />modified accrual basis, receivables that will not be collected within the available period have also been reported as <br />deferred revenue in the fund financial statements. <br /> <br />The preparation offmancial statements in conformity with accounting principles generally accepted in the United <br />States of America requires management to make estimates and assumptions that affect certain reported amounts and <br />disclosures, Accordingly, actual results could differ from those estimates, <br /> <br />-24- <br />
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