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CITY OF GEM LAKE, MINNESOTA NOTES TO BASIC FINANCIAL STATEMENTS DECEMBER 31, 2008 NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) 1. Special Assessment Revenue Recognitfoty (Continued) Within the brid financial statements, the revenue from special assessments is recognized Icy thye. City when it becomes measurable and .available. to finance expenditures of the current fiscal period. In practice, current arid. 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 following January) and are also- recognized as revenue for the Current ..year. All rerhain.ing delinquent, deferred .and special deferred. asses8inents receivable in governmental funding are completely offset by deferred revenues. Deferred revenue in governmental activities is susceptible to full accrual off the government -wide statements. Once a -special assessment roll is adopted, the amount attributed to each .parcel is a Wrt 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. *It* special assessments are allowed. to go delinquent, the property is subject to tax forfeit sale. and 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 assessmerits not adjusted bythb-City's rxity 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 fiveyears. J. Capital Assets Capital assets, which kiciade 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 :government chose to include all :such. items regardless of their acquisition date or amount. 101