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CITY OF GEM LAKE, MINNESOTA <br />RECONCILIATION OF THE GOVERNMENTAL FUNDS STATEMENT OF REVENUES, <br />EXPENDITURES AND CHANGES IN FUND BALANCE TO THE STATEMENT OF ACTIVITIES <br />GOVERNMENTAL FUNDS <br />YEAR ENDED DECEMBER 31, 2007 <br />NET CHANGE IN FUND BALANCES. -:TOTAL. GOVERNMENTAL FUNDS $" 202,243 <br />Amounts reported for governmental activities in the statement of activities are .different <br />because: <br />Governmental funds report capital outlays as expenditures.. However, in the <br />statement. of activities, assets are capitafized.and the cost. is allocated over their <br />estimated useful lives and reported as depreciation expense:. This is the amount by <br />which capital outlays exceeded depreciation in the current period. <br />Capital Outlays $ 815,382 <br />Depreciation Expense (30,914) 784,468 <br />Delinquent and deferred property takes and special assessments receivablewill be <br />collected. subsequent to year-end, .but are not available soon enough to pay for the <br />current Period's expenditures and, therefore, aredeferred in the governmental funds. <br />Deferred Revenue -December 31, 2006 629,807 <br />Deferred Revenue - December.31, 2007 565,476 (64,331) <br />The governmental funds report:bond proceeds as. financing. sources, while repayment <br />of bond principal is reported as an expenditure. In the. statement of net assets, <br />however, issuing debt increases long-term liabilities and does riot affect the <br />statement of activities and repayment of principal reduces the liability.. Also,. <br />governmental funds report -the effect of issuance costs, premiums and discounts <br />when debt is first issued,. whereas these amounts are. deferred and amorti.ized.in the <br />statement of activities. Interest is recognized as an expenditure in the governmental <br />funds when it is due. In the statement of activities, .however, interest expense is: <br />recognized as it accrues; regardless of .when it. is due. The net effect.of these <br />differences in the treatment.af general obligation bonds and related items is as <br />follows: <br />Issuance of Bonds Payable <br />(550,000) <br />Discount on Bond Issue <br />9,716 <br />Bond lssue.Costs <br />21,900 <br />Repayment of. Bond Principal <br />50,321 <br />Change in Accrued Interest Payable <br />(18,308} <br />Amortization of Bond Issue Costs: <br />(2;393) <br />Amortization .of Bond Discount <br />(1,581 }. _ (790,339) <br />CHANGE IN NET ASSETS OF GOVERNMENTAL. ACTIVITIES $ 132,041 <br />See accompanying Notes to Basic Financial Statements. <br />(10).. <br />