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� CITY OF ROSEVILLE, MIiQNESOTA NOTES TO THE FINANCIAL STATEMENTS (CONTINt7ED) DECEMSER 31, 1983 Note 1- Summary of Significant Accounting Policies (Continued) E. Assets, Liabilities and Fund Equity (Continued) Special Assessments - Special assessment revenues are recognized when they become both measurable and available as net current assets. In practice, special assessment pri�cipal and interest is recognized as revenue in the year when assessments are collected. Inventories - Inventories held by the Enterprise funds are stated at the lower of cost or market, 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. Reserve for Encumbrances - 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 balance until expended or accrued as a liability of the fund. Vacation, Sick and Compensatory Time Off Pay - The City compensates employees upon termination for unused vacation and compensatory time off. Employees are not compensated for unused sick pay upon termination of employment, except upon retirement, at which time employees are entitled to one-half of their accumulated leave up to one month's pay. Vacation and compensatory time off are accrued when earned and sick pay is expensed when payment is made in the proprietary funds. Vacation, compensatory time off, and sick pay are recognized when payment is made in the�.governmental funds. Liability for the governmental funds is reflected in the General Long-term Debt Account Group. Tota1 Columns on Combined Statements - Tota1 columns on the combined statements are captioned "Memorandum Only" to indicate they are presented only to facilitate financial analysis. Data in these columns do not present financial position, results of operations, or changes in financial position in conformity with generally accepted accounting principles. Neither is such data comparable to a consolidation. Interfund eliminations have not been made in the aggregation of this data. Note 2- Accountin� Change - Special Assessment Fund Accounting In 1983, the City changed its method of accounting for special assessment revenues in order to comply with the National Council on Governmental Accounting (NCGAj Statement 1. Whereas previously the total principal amounts of the special assessments were recognized as revenue when the assessments were levied, revenue recognition for special assessments caill now be identical to that of other governmental fund revenues which are recognized when they become measureable and available. Accordingly, special assessment principal and interest will be recognized as revenue in the year they become due for collection and allowances for doubtful receivables will be set up for a11 delinquent special assessments receivable at the balance sheet date. Principal amounts of special assessments not yet due for collection will be shown as deferred special assessments in the balance sheet. -35-