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CITY OF CENTERVILLE, MINNESOTA <br /> RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES AND <br /> CHANGES IN FUND BALANCES TO THE STATEMENT OF ACTIVITIES <br /> GOVERNMENTAL FUNDS <br /> FOR THE YEAR ENDED DECEMBER 31, 2012 <br /> Net change in fund balances - governmental funds $ 734,756 <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 66,192 <br /> Depreciation expense (900,854) <br /> The capital projects funds accounted for the construction of Water, Sewer and Storm water fund assets. These <br /> costs of these assets are recorded as expense in the fund statements. When these assets <br /> are complete, they are transferred from the governmental to the business -type activities. (271,886) <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 position. 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 delayed and amortized in the statement of activities. <br /> Principal repayments 545,604 <br /> Debt issued or incurred (515,000) <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. 15,611 <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 (218,696) <br /> Property taxes (3,267) <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 5,679 <br /> Change in net position - governmental activities $ (541,861) <br /> The notes to the financial statements are an integral part of this statement. <br /> -39- <br /> 59 <br />