4.1 ERMUSR 04-14-2020 - Laserfiche WebLink

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Elk River Municipal Utilities Elk River, Minnesota Notes to the Financial Statements December 31,2019 Note 1:Summary of Significant Accounting Policies (Continued) The Utilities follow the policy of providingdepreciation on the straight-line method over the estimated useful lives of the assets, which are as follows: Lives in Years DescriptionElectricWater Production4 - 2025 - 50 Transmission300 Distribution10 - 3325 - 50 General10 - 5010 - 50 Machinery, Tools, and Equipment5 - 105 - 10 Automobiles3 - 83 - 8 Deferred Outflows of Resources In addition to assets, the statement of netposition will sometimes report a separate section for deferred outflows of resources. Thisseparate financial statement element, deferred outflows of resources, represents a consumption of net position that applies to a future period(s) and so will not be recognized as an outflow of resources (expense/expenditure) until then. The Utilitieshas twoitems, a deferred charge on refunding and deferred pension resources, whichqualifyfor reporting in this category. A deferred charge on refunding results from the difference in the carrying value of refunded debt and its reacquisition price. This amount is deferred and amortized over the shorter of the life ofthe refunded or refunding debt.Deferred pension resources result from actuarial calculation and current year pension contributions subsequent to the measurement date. Compensated Absences Vacation:All vacation benefits can be carried over from year to year and will be payable upon termination. Unused vacation carryover is limited to the number of hours accrued during the previous year. Sick Leave:Sick leave can be accumulated to a maximum of960 hours from year to year. Upon termination or retirement, employees will have 50 percent of unused sick leave, up to a maximum of 960 hours, converted to cash and deposited into their Post Health Care Savings account. The liability for vacation and sick pay is reported as a liability in the respective funds at year end. Postemployment Benefits other than Pensions Under Minnesota statute 471.61, subdivision 2b., public employers must allow retirees and their dependents to continue coverage indefinitely in an employer-sponsored health care plan, under the following conditions: 1) Retirees must be receiving (or eligible to receive) an annuity from a Minnesota public pension plan, 2) Coverage must continue in group plan until age 65, and retirees must pay no more than the group premium, and 3) Retirees may obtain dependent coverage immediately before retirement. All premiums are funded on a pay-as-you-go basis. The liability was actuarially determined, in accordance with GASB Statement 75, at December 31, 2018. 32 122