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CITY OF GEM LAKE, MINNESOTA <br />RECONCILIATION OF THE GOVERNMENTAL FUNDS STATEMENT OF REVENUES, <br />EXPENDITURES AND CHANGES IN FUND BALANCE T❑ THE STATEMENT OF ACTIVITIES <br />GOVERNMENTAL FUNDS <br />YEAR ENDED DECEMBER 31, 2008 <br />(WITH COMPARATIVE DATA FOR THE YEAR ENDED DECEMBER 31, 2007) <br />2008 2007 <br />NET CHANGE IN FUND BALANCES - TOTAL . GOVERNMENTAL FUNDS $ 65,845 $ 202,243 <br />Amountsreported for governmental activities in the statement of activities are different <br />because: <br />Governmental funds report capital outlays as expenditures. However, in the <br />statement of activities, assets are capitalized and the cost is allocated over their <br />estimated useful lives and reported as depreciation expense. This :is the amount by <br />which capital outlays exceeded depreciation in the current period, <br />Capital Outlays <br />Deprecation Expense <br />Delinquent'and deferred property taxes and special assessments receivable will be <br />collected subsequent toyear-end, but are not available soon enough to pay for the <br />current period's expendituresand, therefore, are deferred in the governmental funds. <br />$96, 516 <br />(51,631) 44,885 784,468 <br />Deferred Revenue December 31, 2007.565,476 <br />Deferred Revenue - December 31, 2008 543,411 (22,065) (64,331) <br />The governmental funds report bond proceeds as financing sources, while repayment <br />of bond: principal is reported as an expendiiture. In the statement of net assets, <br />however; issuing debt increases long-term liabilities and does not affect the <br />statement of activities and repayment of principal reduces the liability, Also, <br />governmental funds report the effect of issuancecosts, premiums and discounts. <br />when debt is first issued, whereas these amounts are deferred and amortized in the <br />statement of activities. Interest is recognized as anexpenditure in the governmental <br />funds when itis due. Inthe statement of activities, however., interest expense is <br />recognized as it accrues, regardless of when it is due. The net effectof these <br />differences in the treatment of general obligation bonds andrelated items is es <br />fotlows: <br />Repayment of Band Principal 72,207 <br />Change in Accrued Interest Payable 4,605 <br />Amortization of Bond Issue• Costs (2,827) <br />Amortization of Bond Discount _ (1,773) 72,212 (790,339) <br />CHANGE IN NET ASSETS OF GOVERNMENTAL_ ACTIVITIES $ 160,877 $ 132,041 <br />See accompanying Notes to Basic Financial Statements, <br />(10) <br />