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CITY OF CENTERVlLLE, MINNESOTA NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2002 Note 1: SUMMARY OF SlGN1FICANT ACCOUNTING POLICIES - CONTINUED Special Assessments Special assessments represent the fmancing for public improvements paid far by benefiting property owneIS. These assessments are recorded as receivables upon certification to the County. Special assessments are recognized as revenue when they are received in cash or within 60 days after year end. All special assessments receivable are offset by a deferred revenue liability. Interfund Receivables and Payab1es Transactions between funds that are representative oflendinglbonowing arrangements outstanding at the end of the fiscal year are referred to as either "interfund receivables/payables" (i.e., the current portion of interfund loans) or "advances to/from other funds" (i.e., the non-current portion ofinterfund loans). All othor outstanding balances hetwe&! funds are reported as "due to/from other funds." Advances between fimds are offset by a fund balance reseIVe account in applicable governmental funds to indicate they are not available for appropriation and are not expendable available financial resources. Inventories The inventories are stated at the lower of cost or market on the first.in. first-out (FIFO) method. Prepaid Items Certain payments to vendors reflect costs applicable to fuhIre accounting periods and are recorded as prepaid items. . Fixed Assets Fixed assets used in governmental fund types of the City are recorded in the general fIXed assets account group at cost Or estimated historical cost if purchased or constructed. Donated fixed assets are recorded at their estimated fair value at the date of donation. Assets in the general fIXed assets account group are not depreciated. Interest incurred during construction is not capitalized on general fixed assets. Public domain (infrastructure) general fixed assets (e.g.. roads, bridges, sidewalks and other assets that are immovable and of value only to the City) are not capitalized. The cost ofnonnal maintenance and repairs that do not add to the value of the asset or materially extend assets' lives are not included in the general fiXed assets group or capitalized in the proprietary funds. Property, plant and equipmeut in the proprietary funds ofthe City are recorded at cost. Properly, plant aud equipment donated to these proprietary fund type operations are recorded at their estimated fair value at the date of donation.