2004-04-28 WS & CC Meeting - Laserfiche WebLink

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CTIY OF CENTERVILLE, MINNESOTA NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2003 Note I: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED Inventories and Prepaid Items All inventories are valued at cost using the first-in/first-out (FIFO) method Inventories of governmental funds are recorded as expenditures when consumed rather than when purchased. Certain payments to vendors reflect costs applicable to future accounting periods and are recorded as prepaid items in both government-wide and fund fmancial statements. I 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 governmeDl-wide financial statements. Capital assets are defined by the City as assets with an initial, individual cost of more than $5,000 (arnouDl 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 coDSlruCted. Donated capital assets are recorded at estimated fair market value at the date of donation. The cosls of normal maintenance and repairs that do not add to the value of the asset or materially extend assets lives are not capitalized. Major outlays for capital assets and improvements are capitalized as projects are constructed. Interest incurred doring the construction phase of capital assels of business-type activities is included as part of the capitalized value of the assets coDSb:Ucled. Property, plant, and equipment of the City, as well as tIie component units, are depreciated using the slrlligbt line method over the following estimated useful lives: Assets Buildings and building improvements Other improvements Infrastructure Equipment, machinery and vehicles Years 7-50 20-25 25-50 3-25 Compensated Absences It is the City's policy to permit employees to accumulate earned but unused vacation and sick pay benefits. There is no liability for unpaid accumulated sick leave since the City does not have a policy to pay any amounts when employees separate from service with the City. All vacation pay is accrued when incurred in the government-wide and proprietary funds. A liability for these amounts i. reported in governmental funds only if they have matured, for example, as a result of employee resignations and retirements. Union employees are allowed severance eqnal 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 type. the cost of these benefits is recognized when payments are made to the employees. I