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CITY OF ELK RIVER, MINNESOTA <br />RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES AND <br />CHANGES IN FUND BALANCES TO THE STATEMENT OF ACTIVITIES <br />FOR THE YEAR ENDED DECEMBER 31, 2015 <br />Amounts reported for governmental activities in the statement of activities are different because <br />Total net change in fund balances - governmental funds $ 1,736,157 <br />1. Governmental funds report capital outlays as expenditures. However, in the statement <br />of activities, the cost of these assets is allocated over their estimated <br />useful lives and reported as depreciation expense. This is the amount by <br />which depreciation expense exceeded capital outlays in the current period. <br />Capital outlays 5,220,743 <br />Depreciation expense (5,219,342) 1,401 <br />2. The net effect of various miscellaneous transactions involving capital assets <br />including transfers and disposals, which decrease net position. <br />Transfers of capital assets (11,188,695) <br />Disposals (714,245) <br />Depreciation on disposals 490,661 (11,412,279) <br />3. Revenues in the statement of activities that do not provide current financial resources <br />are not reported as revenues in the governmental funds. <br />Other revenue 334,183 <br />Property taxes (21,688) <br />Special assessments (255,005) 57,490 <br />4. The issuance of long-term debt provides current financial resources to governmental funds, <br />while the repayment of the principal of long-term debt consumes the current financial <br />resources of governmental funds. Neither transaction, however, has any effect on net position. <br />Also, governmental funds report the effect of premiums, discounts and similar items when debt <br />is first issued, whereas these amounts are deferred and amortized in the statement of activities. The <br />amounts below are the effects of these differences in the treatment of long-term debt and related items. <br />Repayment of principal on long-term debt 1,505,000 <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 <br />14,254 <br />Amortization of issuance premium <br />51,072 <br />Amortization of deferred charge from refunding <br />(36,265) <br />Compensated absences <br />38,448 <br />Net OPEB obligation <br />(59,014) 8,495 <br />6. Long-term pension activity is not reported in governmental funds. <br />Pension expense <br />309,132 <br />Direct aid contributions <br />27,360 336,492 <br />Change in net position - governmental activities $ (7,767,244) <br />The notes to the financial statements are an integral part of this statement. <br />-38- <br />