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CITY Oi ROSEVILLE NOTES TO FINANCIAL STATEMENTS DELEMBER 31. 1993 Note 1- Surtmarv of Sianificant Accounting Policies (Continued) Fixed assets of the Enterprise funds are capitalized in these funds. Depreciation is charged as an expense against operetions, and is provided on the straight-line method. The follouing table siamiarized depreciable lives of types of property. Years Building and Structures 25- 40 Furniture, equipment, vehicles 5- 20 Distribution system 80-100 The costs of normal maintenance and repairs that do not add to the value of the asset or materiatly extend asset Lives are not capitalized. improvements are capitatized and depreciated over the remaining usefut Lives of the related fixed assets, as applicable. Public domain ("infrastructure") general fixed assets consisting of roads, bridges, curbs and gutters, streets and sidewalks, and tighting systems are not depreciated. These assets are reported in the generaL fixed asset group. Interest is capitalized on proprietary funds assets acquired uith tax-exempt debt. The amount of interest to be capitalized is calculated by oftsetting interest expense incurred fran the date of the borrouing until completion of the project uith interest earned on invested proceeds over the same period. Saecial Assessments - Special assessments are levied a9ainst the benefited properties for the assessabLe costs of special assessment improvement projects in accordance with State statutes. The Lity usually adopts the assessment rolls when the individual projects are complete or substantialty complete. The assessments are coLtectible over a term of years generalty consistent uith the term of years of the related bond issue. Cottection of annuaL instatlments (including interest> is handled by the County in the same manner as property taxes. Property owners are alloued to prepay totat future installments without interest or prepayment penalties. trnentories - Inventories held by the Enterprise funds are stated at the louer of cost or market, using the first-in, first-out method. The cost of inventory is recognized as expense at the time the items ere sotd or used (conswnption method). Utility service charaes are recognized uhen earned uith no attouance for uncollectible as delinquent accounts are certified as a tien against the property biLled. UnbilLed uTility service char9es are included in receivables at year-end. Encumbrances - Encumbrances represent purchase comnitmenis. Enc�anbrances outstanding at year-end are reported as reservations of fund 6alances since they do not constitute expenditures or liabiliiies. Vacation Sick and Comoensatorv 7ime Off Pay - The [ity compensates emptoyees upon termination for unused vacation and compensatory time off. Employees are not compenseted for unused sick pay upon termination of employment, except upon retirement, at which time e�loyees are entitled to one-half of their accumulated leave up to one month's pay. Vacation and compensatory time off are accrued uhen earned and sick pay is expensed uhen payment is made in the proprietary funds. Vacation, compensatory time off, and sick pay are recognized uhen payment is made in the governmentat funds. Liability for the governmental funds is reflected in the General long-Term Debt Account Group representing the City's commitment to fund such costs from future operations. Cash Flous - For purposes of this statement, all highly liquid investmeMs (including restricted assets) uith a maturity of three months or less when purchased are considered to be cash equivalents. Claims - There are a nu�er ot claims for uorker's compensation and liability damage in the internal serviee funds uhich have occurred but have not yet been conveyed to the City on December 31 of each year. The City prepares an estimate of those claims based on historical information and subsequent events. The amount of the estimate is expensed and shoun es a current liability for the reporting year. Post-Re4irement Benefits - The City does not provide for employee post-retirement benefits. G. Comparative Data Comparative data for the prior year have been presented to provide an understanding of changes in the City's financial position and operat�ons. 34