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 Capital assets Capital assets, which include property, plant, equipment and infrastructure assets (e.g., roads, bridges, sidewalks, and similar items) are, reported in the applicable governmental or business -type activities columns in the government -wide financial statements. Capital assets aredefined by the City asassetswith an initial, individual cost of morethan $5,000 (amount not rounded) and an estimated useful life in excess of three years. Such assets are recorded at historical cost or estimated historical cost if purchased or constructed. Donated capital assetsare recorded at estimated fair market valueat the date of donation. In the case of initial capitalization of general infrastructure assets (i.e., those reported by governmental activities) the City chose to include items dating back to June 30, 1980. The City was able to esti mate the historical cost for the initial reporting of these assets through back trending (i.e., estimating the current replacement cost of the infrastructure to be capitalized and using an appropriate price -level index to deflate the cost to the acquisition year or estimated acquisition year). As the City constructs or acquires capital assets each period, including infrastructure assets, they are capitalized and reported at historical cost. The reported val ue excl udes normal maintenance and repairs which are essentially amounts spent in relation to capital assets that do not increase the capacity or efficiency of the item or extend its useful life beyond the origi nal estimate. In the case of donations the City values these capital assets at the esti mated fair value of the item at the date of its donation. Interest incurred during the construction phase of capital assets of business -type activities is included as part of the capitalized val ue of the assets constructed. Property, plant and equipment of the City are depreciated using the straight-line method over the fol lowi ng estimated useful I i ves: Compensated absences It is the City's policy to permit employees to accumulate earned but unused paid time off benefits to a maxi mum of 192 hours. All paid timeoff pay isaccrued when incurred in the government -wide and proprietary funds. A liability for these amounts is reported in governmental funds only if they have matured, for example, as a result of employee resignationsand retirements. Union employees are allowed severanceequal totheir unused compensatory time. In governmental fund types the cost of these benefits is recognized when payments are made to the employees. The General fund is typically used to I iquidate governmental compensated absences. No Useful Lives Assets i n Years Land i mprovements 4 to 25 Other i mprovements 10 to 20 Bui Idi ngs and i mprovements 10 to 50 System i mprovements/i nfrastructure 20 to 50 M achi nery and equi pment 3 to 20 Vehicles 3to 10 Other assets 3 to 15 Compensated absences It is the City's policy to permit employees to accumulate earned but unused paid time off benefits to a maxi mum of 192 hours. All paid timeoff pay isaccrued when incurred in the government -wide and proprietary funds. A liability for these amounts is reported in governmental funds only if they have matured, for example, as a result of employee resignationsand retirements. Union employees are allowed severanceequal totheir unused compensatory time. In governmental fund types the cost of these benefits is recognized when payments are made to the employees. The General fund is typically used to I iquidate governmental compensated absences. No