5.3. ERMUSR 04-12-2016 - Laserfiche WebLink

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ELK RIVER MUNICIPAL UTILITIES ELK RIVER,MINNESOTA NOTES TO THE FINANCIAL STATEMENTS DECEMBER 31,2015 Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES-CONTINUED Accounts receivable Accounts receivable include amounts billed for services provided before year end.The Utilities has established a reserve for uncollectible accounts which is adjusted annually based on the receivable activity.No substantial losses from present receivable balances are anticipated.A summary of the uncollectible account balances at December 31,2015 is as follows: 2015 Electric $ 109,845 Water 26,250 Total $ 136,095 Interfund receivables and payables Transactions between funds that are representative of lending/borrowing arrangements outstanding at the end of the fiscal year are referred to as either"interfund receivables/payables"(i.e.,the current portion of interfund loans)or "advances to/from other funds"(i.e.,the non-current portion of interfund loans). All other outstanding balances between funds are reported as"due to/from other funds". Inventories Inventories are stated at lower of average cost or market on the first-in,first-out(FIFO)method. Prepaid items Certain payments to vendors reflect costs applicable to future accounting periods and are recorded as prepaid items. Restricted assets The amounts in the restricted cash account are set aside in accordance with the issuing resolution for specific bond issues. They will be used for future debt service. Capital assets Capital assets are stated at cost.Capital assets are defined by the Utilities as assets with an initial individual cost of more than$5,000 and an estimated useful life in excess of two years. Expenditures for maintenance and repairs are charged to operations and expenditures that extend the useful life of the asset are capitalized and depreciated.When assets are retired or sold,the related cost and accumulated depreciation are removed from the accounts and any gain or loss on disposition is included in operations. Major expenditures for improvements or capital asset projects are capitalized as projects are constructed. The Utilities follow the policy of providing depreciation on the straight-line method over the estimated useful lives of the assets,which are as follows: Lives in Years Description Electric Water Production 4-20 25 -50 Transmission 30 - Distribution 10-33 25 -50 General 10-50 10-50 Machinery,Tools,and Equipment 5- 10 5 - 10 Automobiles 3 -8 3 -8 128