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CITY C)FELK RIVER, MINNESOTA <br />NOTES TOFINANCIAL STATEMENTS <br />DECEMBER 31.2OQO <br />Note 1: SUMMARY OFSIGNIFICANT ACCOUNTING POLIC|ES-CONTINUED <br />K. Fixed Assets (P�qntinued) <br />Public domain ne1general fixed assets consisting ofroads, bridges, curbs and <br />gutters, streets and sidewalks, drainage systems and lighting systems are not capitalized, as <br />these assets are immovable and cfvalue only hathe government. <br />Assets inthe general fixed asset account group are not depreciated. Depreciation of buildings, <br />production, collection and distribution systems, and equipment and vehicles in the proprietary fund <br />types iscomputed using the straight-line method. <br />The costs nfnormal maintenance and repairs inthe proprietary fund types that donot add hmthe <br />value ofthe asset urmaterially extend asset lives are not capitalized. Improvements are <br />capitalized and depreciated over the remaining useful lives of the related fixed assets. <br />L. Comoensated Absences <br />Vested accumulated vacation and sick leave that is expected bobeliquidated with expendable <br />available financial resources isreported asanexpenditure and afund liability ofthe governmental <br />fund that will pay it. Amounts ofvested oraccumulated vacation and sick leave that are not <br />expected tobeliquidated with expendable available financial resources are reported inthe general <br />long-term debt account group. Nuexpenditure iareported for these amounts, Vested or <br />accumulated vacation leave of proprietary funds is recorded as an expense and liability of those <br />funds aothe benefits accrue to employees. Noliability iorecorded for nonvestingaccumulating <br />rights toreceive sick pay benefits. <br />M. Lon -.t 0 ligations <br />Long-term debt is recognized aseliability ofegovernmental fund when due, or when resources <br />have been accumulated inthe debt service fund for payment early inthe following year. For other <br />long-term obligations, only that portion expected tobe financed from expendable available <br />financial resources isreported esafund liability ofogovernmental fund. <br />Long-term debt and other nb||gotioms financed byproprietary fund operations are reported aa <br />liabilities in the appropriate funds. <br />For governmental fund h/pen, bond premiums and disoounts, as well as issuance couts, are <br />recognized during the current period. Bond proceedseme reported aaanother financing source <br />net ofthe applicable premium ordiscount. Issuance costs, other than those withheld from the <br />actual net proceeds received, are reported aadebt service expenditures. For proprietary fund <br />types, bond premiums and discounts, eewell asissuance costs, are deferred and amortized over <br />the life Vfthe bonds using the straight-line method. Discounts and issuance costs are reported as <br />deferred charges. <br />N. Fund E it <br />Contributed capital is recorded in proprietary funds that have received capital grants or <br />contributions from dewe|opecs, customers orother funds. Reserves represent those portions of <br />fund equity not appropriable for expenditure orlegally segregated for especific future use. <br />Designated fund balances represent tentative plans for future use of financial resources. <br />15 <br />