2003-03-26 CC Packet - Laserfiche WebLink

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I ~) CITY OF CENTERVILLE, MINNESOTA NOTES TO FINANCIAL STATEMENTS DECEMBER 31,2002 Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED Major outlays for capital assets and improvements are capitalized in proprietary funds as projects are constructed. Interest incurred during the construction phase of proprietary fund fixed assets is reflected in the capitalized value of the asset constructed, net of interest earned on the invested proceeds over the same period. Property, plant and equipment are depreciated in the proprietary funds of the City using the straight line method over the following estimated useful lives: ,_"I Assets Years ! Collection system Water distribution system Equipment 60 40 5-10 Wi Compensated AbsenceS It is the City's policy to permit employees to accumulAte a limited amount of earned but unused vacation, which is paid to the employee upon separation. Sick leave may be accumulated but is not payable upon termination from City employment for regular employees. Union employees are allowed severance equal to their unused compensatory time and half their accrued sick leave up to a maximum of 400 homs after 10 years of service. In governmental fund types the cost of these benefits is recognized when payments are made to the employees. A liability of$14,347 represents accrued vacation, sick and compensatory time unused at year end. The liability has been recorded in the genera11ong-term debt account group. Long-term ObUgatlons The City reports long-term debt of govermnenta1 funds at face value in the genera11ong-term debt account group. Certain other govermnenta1 fund obligations not expected to be financed with current available :financial resources are also reported in the genera11ong-term debt account group. Long-term debt and other obligations financed by proprietary funds are reported as liabilities in the appropriate funds. J For governmental fund types, bond premiums and discounts, as well as issuance costs, are recognized during the current period. Bond proceeds are reported as an other financing source net of the applicable premium or discount Issuance costs, other than thOse withheld from the actual net proceeds received, are reported as debt service expenditures. For proprietary fund types, bond issuance costs and discounts are deferred and amortized over the life of the bonds using the straight line method. Fund Equity Reservations of fund balance represent amounts that are not appropriable or are legally segregated for a specific purpose. Reservations of retained earnings are limited to outside third-party restrictions. Designations of fund balance represent tentative management plans that are subject to change. The proprietary fund's contributed capital represents equity acquired through capital grants and capital contributions from developers, customers or other funds. Memorandum Only - Total Columns Total columns on the general purpose :financial statements are captioned as "memorandum only" because they do not represent consolidated :financial information and are presented only to facilitate financial analysis. The columns do' not present information that reflects financial position, results of operations or cash flows in accordance with accounting principles generally accepted in the United States of America. Interfund eliminations have not been made in the aggregation of this data. -14-