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CITY OF ELK RIVER, MINNESOTA <br />RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES, <br />AND CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS <br />TO THE STATEMENT OF ACTIVITIES <br />YEAR ENDED DECEMBER 31, 2011 <br />NET CHANGE IN FUND BALANCES - TOTAL GOVERNMENTAL FUNDS <br />Amounts reported for governmental activities in the statement of activities are different because: <br />1. Governmental funds report capital outlays as expenditures. However, in the <br />statement of activities the cost of those assets is allocated over their estimated <br />useful lives and reported as depreciation expense. This is the amount by <br />which depreciation exceeded capital outlays in the current period. <br />$ 2,172,930 <br />Capital outlay $ 3,159,927 <br />Depreciation expense (5,532,700) (2,372,773) <br />2. The net effect of various miscellaneous transactions involving capital assets <br />including transfers and disposals, which decrease net assets. <br />Disposals (276,426) <br />Depreciation on disposals 230,231 (46,195) <br />3. Revenues in the statement of activities that do not provide current financial <br />resources are not reported as revenues in the governmental funds. <br />Property taxes (115,098) <br />Special assessments (285,669) <br />Notes receivable (200,981) (601,748) <br />4. The issuance of long -term debt provides current financial resources to governmental <br />funds, while the repayment of the principal of long -term debt consumes the current <br />financial resources of governmental funds. Neither transaction, however, has any <br />effect on net assets. This amount is the net effect of these differences in the <br />treatment of long -term debt and related items. <br />Repayment of principal of long -term debt 2,618,146 2,618,146 <br />5. Some expenses reported in the statement of activities do not require use of current <br />financial resources and, therefore, are not reported as expenditures in governmental funds. <br />Accrued interest payable 25,816 <br />Amortization of issuance premium 19,953 <br />Amortization of issuance costs (4,394) <br />Amortization of deferred charge from refunding (36,265) <br />Compensated absences (80,386) <br />Net OPEB obligation (64,821) (140,097) <br />CHANGE IN NET ASSETS OF GOVERNMENTAL ACTIVITIES $ 1,630,263 <br />The notes to the financial statements are an integral part of this statement. <br />26 <br />