6.1. SR 06-06-2005 - Laserfiche WebLink

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CITY OF ELK RIVER, MINNESOTA NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2004 Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED Cash balances from all funds are combined and invested to the extent available in authorized investments. Earnings from such investments are allocated to the respective funds on the basis of applicable cash balance participation of each fund. Investments are reported at fair value, based upon quoted market prices. 2. Receivables and Payables Due To/From Other Funds During the course of operations, numerous transactions occur between individual funds for goods provided or services rendered. These receivables and payables are classified as "due from other funds" or "due to other funds" on the balance sheets of the fund financial statements. Any residual balances outstanding between the governmental activities and business-type activities are reported in the government-wide fmancial statements as "internal balances." PropertY Taxes The City Council annually adopts a tax levy and certifies it to the County in December each year for collection the following year. The County is responsible for collecting all property taxes for the City. These taxes attach an enforceable lien on taxable property as of January 1 and are payable by the property owner in May and October each year. The taxes are collected by the County Treasurer and tax settlements are made to the City three times a year, in January, July and December. In the fund financial statements, taxes that remain unpaid at December 31 are classified as delinquent taxes receivable and are fully offset by deferred revenue, because they are not known to be available to finance current expenditures. Deferred revenue in governmental activities is susceptible to full accrual on the government-wide statements. Special Assessments Special assessments receivable include the following components: · Delinquent - includes amounts billed to property owners but not paid. · Deferred - includes assessment installments that will be billed to property owners in future years. Special assessments in the fund fmancial statements are recognized as receivable and deferred revenue when the levy against the benefited property is adopted by the City Council and certified to the County for collection. Deferred revenue for governmental activities is susceptible to full accrual on the government-wide statements. Notes Receivable The City received grant proceeds from the State of Minnesota to fund economic development projects. These funds have been loaned to several businesses and the terms of repayment vary with each loan. Under terms of the grant agreement, a portion of the original grant will be returned to the State of Minnesota and is reported as a due to other governments liability. The portion of the notes receivable loaned to businesses is offset by deferred revenue. Deferred revenue in governmental activities is susceptible to full accrual on the government-wide statements. 3. Inventories and Prepaid Items For proprietary funds, inventories are valued at cost, which approximates market, based on physical counts. Inventories are recorded as an expense when consumed rather than when purchased. Certain payments to vendors reflect costs applicable to future accounting periods and are recorded as prepaid items in both government-wide and fund financial statements. 37 I I I I I I I I I I I I I I I I I I I