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CITY OF GEM LAKE, MINNESOTA NOTES -TO BASIC FINANCIAL STATEMENTS DECEMBER.3.1, 2016. NOTE1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The financial statements oftlie tit y of Gem Lake (the City), Minnesota have been prepared WcotifQrmity with U.S. generally accepted accounting principles as applied to governmental units. by the Governmental Accounting Standards Board (GASB). The following is a summary of the significant accounting -policies. A. Financial Reporting Entity As required by U..S. generally- accepted *accounting principles, the financial statements of then reporting entity include those of the City of Gem Lake and its component units. A component unit. is. a legally separate ,entity for. which the primary government is financially accountable, or for which the exclusion of the component unit would render the financial statements of the primary government misleading, The criteria used to determine if the primary government is*financially accountable for a component include whether or not. the: primary government appoints the voting majority of the potential component unit'. board, is able -to: impose its: will on the potential component unit, is in a relationship of financial benefit.de burden with the potential component unit, or is fiscally depended upon by the potential%component unit. Based.on.th.ese criteria, there are no organizations considered to be component units of the. City. B. Basic Financial Statements 1. Government -Wide Statements The government -wide financial statements (1,6 , the Statement of net position and the statement of activities) .display informatiori about the primary government and its component units. These statements include.the financial activities of the overall City government. Eliminations have been made to minimize the double -counting of internal activities. Governmental activities, which normally are supported 'by. taxes and intergovernmental revenues, -are reportgd. separately from buglness-type activities, which rely -to -a significant extent on fee.s:and charges -to -external parties for support.. (13)