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CCP 05-22-2006
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CCP 05-22-2006
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5/8/2007 1:21:35 PM
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<br />.0Ie1: <br /> <br />. <br /> <br />. <br /> <br />CITY OF ARDEN HILLS, MINf-,lJiSOT A <br />NOTES TO THE FINANCIAL STATEMENTS <br />DECEMBER 31 2005 <br /> <br />SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED <br /> <br />C. Measurement Focus, Basis of Accounting and Financt S~te~enRla ' F I" <br /> <br />The government-wide [mancial statements are reported ln ~nomic f~rc '1l1camr-emen oem a d the <br />accrual basis of accounting, as are the proprietary fund J..d fiduciary flUld fmancial statements. Revenues Ire <br />recorded when earned and expenses are recorded when a kabililM.,isdncmre<LJ~.ar<lies""'LthpJi'lli!>g,",f-IeThted cash <br />flows. 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 aTe reported using the curren! financial resources measurement focus and <br />the modified accrual basis of accounting. Revenues are recognized as soon as they arc both measurable and <br />available. Revenues are cOl4">ldered to be available when they are collectible vvithin the current 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 current 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 nment 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 v.ritbin the current fiscal period is considered to be susceptible to accrual as <br />revenue of the current period. A]] 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 essentialJy equal value, is <br />recorded on the accrual bas-is 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 />tl-:::e year for \'vmch the tax is k\li.~d. Revenue from gr3..,.'115, entitlements ano donations is reeognizcd in the year in <br />whkh all eligibility requirements bave been satisfied. Eligibility requirements include timing requirements, which <br />specify the year when the resources aTe 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 expendimre <br />requircments, in which the resources are provided to the City on a reimbursement basis. On a modified accmal <br />basis, revenue from non-exchange transactions must also be available before it can be Tecognized. <br /> <br />Deferred revenue arises when assets are recognized before revenue recognition criteria have been satisfied. Grants <br />and entitlements reccived before eligibility requirements are met are also recorded as deferred revenue. On the <br />modified accrual basis, receivables that .will not be co1Jccted \vitmn the avallable period have also been rep0l1ed as <br />deferred revenue :in the fund financial statements. <br /> <br />The preparation offmancial statements in confonnlty Vlrith accounting principles generally accepted in the United <br />States of A.merica requ.ires 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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