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<br />NORTH METRO TELECOMMUNICATIONS COMMISSION <br />NOTES TO FINANCIAL STATEMENTS <br /> <br />NOTE 1. <br /> <br />NATURE OF ACTIVITIES AND SIGNIFICANT ACCOUNTING POLICIES <br />(continued) <br /> <br />Cash and Cash Equivalents: <br /> <br />For the purpose of the statements of cash flows, the Commission considers all highly <br />liquid debt instruments purchased with an original maturity of three months or less to be <br />cash equivalents. <br /> <br />Cash and cash equivalents December 31,2003 and 2002 consisted of the following: <br /> <br />2003 2002 <br /> <br />Minnesota Money Market Fund (4M) $ 1,080,503 <br />General Government Securities Money <br />Market Fund 1,066,463 <br /> <br />$ 854,758 <br /> <br />$ 2,146,966 <br /> <br />$ 854,758 <br /> <br />Checking and savings accounts at the Minnesota Money Market Fund (4M) and <br />Government Securities Money Market Fund are fully insured. The 4M Fund investments <br />are exempt from Governmental Accounting Standards Board Statement No.3 reporting <br />requirements. <br /> <br />Allowance for Doubtful Accounts: <br /> <br />No allowance for doubtful accounts has been provided as of December 31, 2003 and <br />2002, as management considers all receivables to be fully collectible. <br /> <br />Property and Equipment: <br /> <br />Fixed assets are capitalized at cost and depreciated on a straight line basis over an <br />estimated useful life of five to ten years. Donated assets are recorded and reflected in the <br />accompanying financial statements at their fair market values at the date they are <br />received. <br /> <br />The costs of normal maintenance and repairs that do not add to the value of the assets or <br />materially extend asset lives are not capitalized. <br /> <br />Amortization: <br /> <br />Loan fees are amortized over the term of the related long-term obligation of 15 years. <br /> <br />7 <br />