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CITY OF GEM LAKE, MINNESOTA NOTES TO BASIC FINANCIAL STATEMENTS DECEMBER 31 2010 NOTE '1 SUMMARY OF SIGNIFICANT ACCOUNTING. POLICIES (CONTINUED) Special Assessment Revenue Recognition (Continued) Within the fund financial statements, the revenue from special assessments is recognized by the City when it becomes. measurable and available to finance expenditures of the current fiscal period. In -practice, current and delinquent special assessments received by the City are recognized as revenue for the current year. Special assessments are collected by the County and: remitted by December 31 (remitted to the City the.fol[owing January) and are also recognized as revenue. for the current year. All remaining delinquent, deferred and special deferred. assessments receiiable in. governmental furiding are completely offset. by deferred revenues. Deferred revenue in governmental activities is susceptible to full accrual on the government -wide statements. Once a special assessment toll is adopted, the amount attri.buted.to each parcel is a.lien upon that property until full payment is made or the amount is determined to be excessive by the City's City Council or court action. If special assessments are allowed to go delinquent, the property is subject to tax forfeit sale acid the first proceeds. of that sale (after costs, penalties and expenses of sale). are remitted to the City in payment.of delinquent special assessments. Generally, the City will collect the full amount of its special assessments not adjusted by the City's. City Council or court action. Pursuant to State Statutes, a property shall be subject to. a tax forfeit sale after three years unless it is homesteaded, agricultural or seasonal recreational land in which event- the. property is subject to such sale after five years. J. Capital Assets Capital assets, which include property, plant, equipment, and infrastructure assets (e.g., roads, sidewalks, street lights, and similar items) are reported in the applicable governmental or business -type :activities columns in the government -wide financial statements. Capital assets are recorded at historical cost or estimated historical cost if purchased. or constructed. The cost of normal maintenance and repairs that do not add. to the value of the asset or materially extend asset lives are not capitalized. Major outlays.for capital assets and improvements are capitalized as projects are constructed. The government. reports infrastructure assets on a. network and subsystem basis..In the case of the initial. capitalization of .general infrastructure assets {i:e., those reported by governmental activities) the City chose to include all such items regardless of their acquisition date or amount. (19)