5.1. ERMUSR 04-13-2010 - Laserfiche WebLink

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ELK RIVER MUNICIPAL UTILITIES ELK RIVER, MINNESOTA NOTES TD FINANCIAL STATEMENTS DECEMBER 31, 2D09 AND 2DD8 Dote 1: SUMMARY GF SIGN~EICANT ACC®IUNTING PGL~C~ES ~ CG.NTINUED Pro~rieta~y funds are accounted for on the flow of economic resaurces ~neasurement focus and use the accrual basis of accounting, Under this method, revenues are recorded when earned and expenses are recorded at the time liabilities are incurred, In accordance with the provisions of the GASB Statement No, 2D, Accounting and Financial Reporting fog Prap~ieta~~ Funds and other GavernmentaZ Entities that use ~'roprietary Fund Account, the Utilities applies all applicable GASB pronouncements plus all Financial Accounting Standards Board (FASB} Statements and Interpretations, Accounting Principles Board opinions, and Accounting Research Bulletins issued on or before November 30,1989, except for those that conflict with or contradict GASB pronouncements, The Utilities has elected not to apply FASB Statements and Intei~retatians issued a~ez• November 30,1989. Proprietary fiuads include the fallowing fund type; EnteNp~ise funds account for those operations that are financed and operated in a manner similar to private business or where the Utilities has decided that the determination of revenues earned, costs incurred andlor net income is necessary for management accountability. Proprietary fiu~ds distinguish operating revenues and expenses from nonapet~ating items, Operating revenues and expenses generally result fi•om providing services and producing and delivering goods in connection with a proprietary field's principal ongoing operations. The principal operating revenues of the water and Electric enterprise fiuads are charges to customers far sales and service, 4perathlg expenses for entezprise funds include the cost of sales and services, administrative expenses and depreciation on capital assets, All revenues and expenses not meeting this definition are reported as nonoperating revenues and expenses. The Utilities reports the following maj or proprietary funds; The Elect~~ic fund accounts for the electric dist~•ibution operations, The Water fund accounts far the water distribution system, when both restricted and unrestricted resources are available for use, it is the Utilities' policy to use restricted resources first, then un~~estricted resources as they are needed. C. Assets, Liabiiities and Net Assets Cash and Cash Equivalents The Utilities' cash and cash equivalents are considered to be cash on hand, demand deposits and sho~•t~terzn u~vestinents with original maturities of tlnee months or less from the date of acquisition, Cash balances from all funds are pooled and invested, to the extent available, in certificates of deposit and other authorized investments, Earnings from such hnvestments are allocated an the basis of applicable pal•ticipation by each of the fiands, _3 D.