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CITY OF ELK RIVER, MINNESOTA <br />RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES, <br />AND CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS <br />TO THE STATEMENT OF ACTIVITIES <br />YEAR ENDED DECEMBER 31, 2006 <br />NET CHANGE IN FUND BALANCES - TOTAL GOVERNMENTAL FUNDS$(1,955,155) <br />Amounts reported for governmental activities in the statement of activities are different because: <br />1.Governmental funds report capital outlays as expenditures. However, in the <br />statement of activities the cost of those assets is allocated over their estimated <br />useful lives and reported as depreciation expense. This is the amount by <br />which depreciation exceeded capital outlays in the current period. <br /> Capital outlay $10,305,281 <br /> Depreciation expense (4,340,529) 5,964,752 <br />2.The net effect of various miscellaneous transactions involving capital assets <br />including donations and disposals, which increase net assets. <br /> Donations 3,289,162 <br /> Disposals (198,002) <br /> Depreciation on disposals 160,515 3,251,675 <br />3.Revenues in the statement of activities that do not provide current financial <br />resources are not reported as revenues in the governmental funds. <br /> General property taxes 16,031 <br /> Special assessments 117,374 <br /> Notes receivable 84,807 218,212 <br />4.The issuance of long-term debt provides current financial resources to governmental <br />funds, while the repayment of the principal of long-term debt consumes the current <br />financial resources of governmental funds. Neither transaction, however, has any <br />effect on net assets. This amount is the net effect of these differences in the <br />treatment of long-term debt and related items. <br /> Issuance of long-term debt (5,989,694) <br /> Repayment of principal of long-term debt 7,051,836 1,062,142 <br />5.Some expenses reported in the statement of activities do not require use of current <br />financial resources and, therefore, are not reported as expenditures in governmental funds. <br /> Accrued interest payable 116,788 <br /> Compensated absences (22,098) 94,690 <br />CHANGE IN NET ASSETS OF GOVERNMENTAL ACTIVITIES$ 8,636,316 <br />The notes to the financial statements are an integral part of this statement. <br />24 <br /> <br />