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CITY Or GEM LAKE; Notes 3o BaSi& Financial Statements December 31, 2024 NOTE .I --SUMMARY OF.SIGNIFiCANT ACCOUNTING POLICIES A. Organization The City of Gem Lake, Minnesota (the City) was incorporated in 1959 and operates under the.state of Minnesota. Statutory- Plan A. form of government. The. City Council is the governing body and is composed of an elected mayor and.four count imenrbers who exercise legislative authority and determine .all matters of policy. The City Council appoiiits'personnel responsible for.the proper Administration of all affairs relating to the.:City. The accounting policies. of the City conform to* Accounting. principles. generally accepted .in tlie: United States'of America.as applicable to governmental units. The G6\,6mtrrental Accounting Standards Board is the accepted statrdard-setting body for establishing goverhOlental accounting and 'financial reporting principles. & Reporting Entity As required by. accounting principles generally accepted: in the United States of America, these financial statements include the City (the primary government) and its* component units. Component units:. are legally separate entities 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 unit includes whether or not the .primary government appoints the voting majority of the .potential component. unit's board,. is able to impose its will. on. the potential component runt, is *in a relationship of financial benefit or burden with the potential component unit, or 'is -fiscally depended. -upon by the:potential component unit. Based onthese*akeria, there*are no organizations considered t6be component. units of the Csty.. .C. Governanent Wide Financial. Statements. The. government -wide financial statements. (Statement cif Net Position and Statement of Activities) display.infonnation about the reporting: government as a whole. These. statements include all of the :financial, activities of the City. Governmental activities. which normally are supported by taxes and intergovernmental revenues, .are reported separately from business -type activities, which rely to a -significant extent on- sales, fees, and charges £or support. 37he Statement of Aotivlties.demonstrates the degree to which the direct expenses of a given function or segment are offset by program revenues. Direct expenses are those that are clearly identifiable with a specific functYon or segment: Program revenues i.ncl... l) charges to :custorrrer gr applicants who purchase; use,: or directly benefit from goods, services; or privileges.. prgvided by: a given hrnction or segment,:2) operating grants and -contributions; and 3) -capital grants and contributiohs, including special assessments that are restricted to meeting the operational or capital requiieriients of a. particular function or. segment. Taxes and other -internally -directed revenues are reported As general revenues. -18-