2005-12-31 Annual Finance Report

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CITY OF CENTERVILLE, MINNESOTA RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES TO THE STATEMENT OF ACTMTIES GOVERNMENTAL FUNDS YEAR ENDED DECEMBER 31, 2005 Total net change in fund balances - governmental funds Amounts reported for governmental activities in the statement of activities are different because: Capital outlays are reported in governmental funds as expenditures. However, in the statement of activities, the cost of those assets is allocated over the estimated useful lives as depreciation expense. Capital outlay Depreciation expense Loss on disposal of assets The capital projects funds accounted for the construction of Water and Sewer fund assets. These costs of these assets are recorded as expense in the fund statements. When these assets are complete, they assets are transferred from the governmental to the business type activities. The issuance oflong-term debt provides current financial resources to governmental funds, while the repayment of principal of long-term debt consumes the current financial resources of governmental funds. Neither transaction, however, has any effect on net assets. Also, governmental funds report the effect of issuance costs, premiums, discounts and similar items when debt is fust issued, whereas these amounts are deferred and amortized in the statement of activities. Principal repayments Debt issued or incurred Interest on long-term debt in the statement of activities differs from the amount reported in the governmental fund because interest is recognized as an expenditure in the funds when it is due, and thus requires the use of current financial resources. In the statement of activities, however interest expense is recognized as the interest accrues, regardless of when it is due. Governmental fund report debt issuance premiums and discounts as an other financing source or use at the time of issuance. Premiums and discounts are reported as an unamortized asset or liability in the district-wide financial statements. Certain revenues are recognized as soon as it is earned. Under the modified accrual basis of accounting certain revenues cannot be recognized until they are available to liquidate liabilities of the current period. Special assessments Property taxes Some expenses reported in the statement of activities do not require the use of current financial resources and, therefore, are not reported as expenditures in governmental funds. Compensted absenses Change in net assets - governmental activities The notes to the financial statements are an integral part of this statement. -10- $ (2,308) 276,452 (564,879) (54,045) (39,108) 485,000 (827,750) 20,036 (15,744) (510,723) (29,999) (9,998) $ (1,273,066)