2012-04-11 CC Packet - Laserfiche WebLink

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CITY OF CENTERV I L L E, MINNESOTA NOTESTOTHE FINANCIAL STATEMENTS DECEMBER 31, 2011 Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES- CONTINUED C. Measurement focus, basis of accounting and financial statement presentation The government -wide f nanci al statements are reported using the econonic resources measurement focus and the accrual basis of accounting, as are the proprietary fund financial statements. Revenues are recorded when earned and expenses are recorded when a l i a b i l i t y 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 si mi I ar items are recognized as revenue as soon as all eligibility requirements imposed by the provider have been met. Governmental fund f nanci al statements are reported usi ng the current financial resources measurement focus and the modified accrual basis of accounting. Revenues are recognized as soon as they are both measurable and avai I able. Revenues are considered to be available when they are col I ecti bl e wi thi n the current period or soon enough thereafter to pay I i abi I ities 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 servi ce expenditures, as well as expenditures related to compensated absences and clai ms and j udgments, 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 suscepti ble 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 susceptible 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 resulting f rom exchange transacti ons, in which each party givesand recei ves essenti al I y equal value, is recorded on the accrual basiswhen the exchange takes place. On a modified accrual basis, revenue is recorded i n the year i n whi ch the resources are measurabl e and become avai I abl e. Non - exchange transactions, in which the City receives value without directly giving equal value in return, include property taxes, grants, entitlement and donations. On an accrual basis, revenue from property taxes is recognized i n 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 i ncl ude ti mi ng requirements, which specify the year when the resources are requi red to be used or the year when use is f rst permitted, matchi ng requirements, in which the City must provide local resources to be used for a specified purpose, and expenditure requi rements, i n which the resources are provided to the City on a rei mbursement 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 recei ved before eligibility requi rements are met are al so recorded as deferred revenue. On the modified accrual basis, recei vabl es that will not be collected within the available period have also been reported as deferred revenue in the fund financial statements. The preparation of financial statements in conformity with accounting principles generally accepted in the United States of Ameri ca requi res management to make esti mates and assumptions that affect certai n reported mounts and disclosures. Accordingly, actual results could differ from those estimates. -50-