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CITY OF CENTERVILLE, MINNESOTA <br />RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES <br /> AND CHANGES IN FUND BALANCES (DEFICITS) <br />TO THE STATEMENT OF ACTIVITIES <br />GOVERNMENTAL FUNDS <br />FOR THE YEAR ENDED DECEMBER 31, 2010 <br />Net change in fund balances - governmental funds$ (3,058,911) <br />Amounts reported for governmental activities in the statement <br />of activities are different because: <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 useful lives as depreciation expense. <br />Capital outlay 795,975 <br />Depreciation expense (505,460) <br />Book value on disposal of assets (1,360) <br />The issuance of long-term debt provides current financial resources to governmental funds, while <br />the repayment of principal of long-term debt consumes the current financial resources of governmental <br />funds. Neither transaction, however, has any effect on net assets. Also, governmental funds report <br />the effect of issuance costs, premiums, discounts and similar items when debt is first issued, <br />whereas these amounts are deferred and amortized in the statement of activities. <br />Principal repayments 2,882,104 <br />Amortization of deferred charges (14,257) <br />Interest on long-term debt in the statement of activities differs from the amount reported in the <br />governmental fund 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. 15,026 <br />Certain revenues are recognized as soon as they are 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 (644,162) <br />Property taxes 12,461 <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 payable (13,789) <br />Other postemployment benefits payable 19,055 <br />Change in net assets - governmental activities$ (513,318) <br />The notes to the financial statements are an integral part of this statement. <br />-38- <br /> <br />