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CITY OF ELK RIVER, MINNESOTA <br />NOTES TO THE FINANCIAL STATEMENTS <br />DECEMBER 31, 2017 <br />40 <br />NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – CONTINUED <br />H.Property Taxes <br />T he City Council annually adopts a tax levy and certifies it to the County in December each year for collection the <br />following year. The County is responsible for collecting all property taxes for the City. Property tax levies are based on <br />property values assessed on January 2 of the preceding year. The County spreads all levies over all taxable property. <br />These taxes attach an enforceable lien on taxable property as of January 1 and are payable by the property owner in May <br />and October each year. The taxes are collected by the County Treasurer and tax settlements are made to the City three <br />times a year, in January, July and December. <br />In the fund financial statements, taxes that remain unpaid at December 31 are classified as delinquent taxes and are offset <br />by a deferred inflow of resources for delinquent taxes not received within 60 days after year end. Deferred inflow of <br />resources for taxes in governmental activities is susceptible to full accrual on the government-wide statements. <br />I.Special Assessments <br />Special assessments receivable includes the following components: <br />•Delinquent - includes amounts billed to property owners but not paid. <br />•Unavailable - includes assessment installments that will be billed to property owners in future <br />years. <br />Special assessments represent the financing for public improvements paid for by benefiting property owners. These <br />assessments are recorded as receivables upon certification to the County. In governmental fund financial statements, <br />special assessments are recognized as revenue when they are received in cash or within 60 days after year end. All <br />governmental special assessments receivable not received within 60 days after year end are offset by a deferred inflow of <br />resources in the governmental fund financial statements. At December 31, 2017, the total delinquent special assessment <br />receivable balance was $32,857. <br />J.Notes Receivable <br />Notes receivable consists primarily of loans made by the City to area businesses for development purposes. The terms <br />and interest rates of the individual loans vary. <br />K.Inventories and Prepaid Items <br />For the proprietary funds, inventories are valued at cost, which approximates market, using the first-in, first-out (FIFO) <br />method. Inventories are recorded as an expense when sold or consumed rather than when purchased. <br />Certain payments to vendors reflect costs applicable to future accounting periods and are recorded as prepaid items in <br />both government-wide and fund financial statements. The cost of prepaid items is recorded as an expenditure/expense <br />when consumed rather than when purchased. <br />L.Property Held for Resale <br />These assets are recorded at the lower of original cost or current net realizable value in the governmental fund which <br />purchased them. <br />M.Restricted Assets <br />The amounts in the restricted cash account are set aside in accordance with the issuing resolution for specific bond <br />issues. They will be used for future debt service.