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2005-06-22 Handouts
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2005-06-22 Handouts
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<br />CITY OF CENTERVILLE, MINNESOTA <br />NOTES TO FINANCIAL STATEMENTS <br />DECEMBER 31, 2004 <br /> <br />Note 1: SUMMARY OF SIGNlFlCANT ACCOUNTING POLICIES - CONTINUED <br /> <br />Property Taxes <br /> <br />The Council annually adopts a tax levy in December and certifies it to the County for collection in the following <br />year. The County is responsible for collecting all property taxes for the City. These taxes attach an enforceable lien <br />on taxable property within the City on January I and are payable by the property owners in two installments. The <br />taxes are collected by the County Auditor and tax settlements are made to the City during January, July and <br />December each year. <br /> <br />Taxes payable on homestead property, as defined by Minnesota statutes, were partially reduced by a market value <br />credit aid. The credit is paid to the City by the State of Minnesota (the State) in lieu of taxes levied against the <br />homestead property. The State rentits this credit in two equal installments in October and December each year. <br /> <br />Delinquent taxes receivable include the past six years' uncollected taxes. Delinquent taxes have been offset by a <br />deferred revenue liability for delinquent taxes not received within 60 days after year end in the fund financial <br />statements. <br /> <br />Special Assessments <br /> <br />Special assessments represent the fmancing for public improvements paid for by benefiting property owners. These <br />assessments are recorded as receivables upon certification to the County. Special assessments are recognized as <br />revenue when they are received in cash or within 60 days after year end. All special assessments receivable are <br />offset by a deferred revenue liability in the fund financial statements. <br /> <br />Inventories and Prepaid Items <br /> <br />All inventories are valued at cost using the first-in/first-out (FIFO) method. Inventories of governmental funds are <br />recorded as expenditures when consumed rather than when purchased. <br /> <br />Certain payments to vendors reflect costs applicable to future accounting periods and are recorded as prepaid items <br />in both government-wide and fund fmancial statements. <br /> <br />Capital Assets <br /> <br />Capital assets, which include property, plant, equipment and infrastructure assets (e.g., roads, bridges, sidewalks, <br />and sintilar items) are reported in the applicable governmental or business-type activities columns in the <br />government-wide fmancial statements. Capital assets are defined by the City as assets with an initial, individual cost <br />of more than $5,000 (amount not rounded) and an estimated useful life in excess of three years. Such assets are <br />recorded at historical cost or estimated historical cost if purchased or constructed. Donated capital assets are <br />recorded at estimated fair market value at the date of donation. <br /> <br />The costs ofnorrnal maintenance and repairs that do not add to the value of the asset or materially extend assets' <br />lives are not capitalized. <br /> <br />Major outlays for capital assets and improvements are capitalized as projects are constructed. Interest incurred <br />during the construction phase of capital assets of business-type activities is included as part of the capitalized value <br />of the assets constructed. <br /> <br />-21- <br />
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