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CITY OF ROSEVILLE, MINNESOTA NOTES TO THE FINANCIAL STAT�MENTS (CONTINUED) DECEMBSR 31, 1979 Note 1- Summary of Significant Accounting Policies (Continued) Investments - Investments a�-e carried at cost, which approximates market. Inventories - Inventories held by the Enterprise funds are stated at the lower of cost or market,whichever is lower using the first-in first-out method. The only other items of inventory would be a small quantity of supplies which are expensed when purchased. � Fixed Assets and Depreciation - All assets are recorded�at historical cost or est- imated historical cost, if the original cost is not availa6le. Additions to fixed assets for general City purposes, including public domain (infrastructure) fixed assets, are recorded as an expenditure of the applicable fund in the year in which this asset is purchased, and are capitalized in the General Fixed Asset Account Group. Depreciation is not recorded on these assets. Fixed assets of the Enterprise Punds are capitalized in these funds�. Depreciation is provided on the straight-line method. The following table summarizes depreciable lives by type of property. ' Years Building and Structures � 25 - 40 , Furniture, Equipment, Vehicles . 5- 20 Distribution Systems . 80 - 100 General Long-term Debt - The general long-term liabilities, except for Enterprise and Special Assessment funds, are not carried as a liability of a fund, but rather are set up in a separate self-balancing group of accounts known as the "general long-term debt group of accounts". . Budget - A plan of financial operation is set forth in the annual budget adopted by the City Council. The amounts shown in the financial statements represent the original budgeted amount and a11 revisions made during the year by the Council. �� The budget for the general and special revenue funds are on the modified accrual basis. A11 budget amounts iapse at the end of the year to the extent they have.not beee expended or encumbered. _ - � . . Reserve for Encumbrance - Encumbrances are reported for governmental type funds and are not the equivalent of expenditures.� Encumbrances are shown as�part of fund balance. They are recorded as reservation of fund balances until expended or accrued as a liability of the fund. Vacation and Sick Pa� - The City compensates all employees upon. termination for unused vacation. The expense for vacation pay is recognized when payment is made. The accumulated liability for unpaid vacation benefits on�December 31, 1979,�was approx- imately $130,000. 26