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NOTE I <br />CITY OF GEM LAKE, MINNESOTA <br />NOTES TO BASIC FINANCIAL STATEMENTS <br />DECEMBER 31, 2011 <br />SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) <br />J. Capital Assets (Continued) <br />Depreciation on exhaustible_ assets is recorded as an allocated :expense in the <br />statement of activities with accumulated depreciation `reflected. in the statement of net <br />assets. Since surplus assets are sold for an immaterial amount when declared as no <br />longer needed for City purposes, no salvage value is taken into consideration for <br />depreciation purposes. Capital assets not being depreciated include construction in <br />progress. <br />Assets <br />Buildings <br />Office Equipment <br />Utility Systems <br />Infrastructure <br />K. Long -Term Obligations <br />❑epreciation <br />Method <br />:Straight�Line. <br />Straight -Line <br />Straight -Line <br />Straight -Line <br />Estimated <br />Useful Life. <br />40 Years <br />5 -10 Years <br />20 - 50 Years <br />20 -:50 Years <br />In th.e entity -wide. financial statements, long-term debt and other long-term obligations. <br />are reported as liah.ilities in the applicable governmental. activities. Bond premiums and <br />discounts are deferred and amortized over the life of the bonds using the straight-line <br />method. Bond issue costs, if material, are reported as prepaid items and amortized over <br />the term of the related debt.using thestraight-line method. <br />In the governmental fund financial. statements, bond premiums and discounts, as well as <br />bond issue costs are recognized during the current period. The face amount of the debt <br />Issue Is reported as on other financing source. Premiums received on debt Issuances <br />are reported as other financing sources while discounts are reported as other financing <br />uses. Issue costs are reported as debt service. expenditures. <br />