Laserfiche WebLink
CITY OF LITTLE CANADA, MINNESOTA <br />NOTES TO BASIC FINANCIAL STATEMENTS <br />DECEMBER 31, 2015 <br /> <br /> <br /> <br />(45) <br /> <br />NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) <br />M. Capital Assets <br />Capital assets, which include land, buildings, improvements, equipment, infrastructure <br />(utility systems, roads, bridges, sidewalks, and similar items), and intangible assets such <br />as easements are reported in the applicable governmental or business-type activities <br />columns in the government-wide financial statements. Such assets are capitalized at <br />historical cost, or estimated historical cost for assets where actual historical cost is not <br />available. Donated assets are recorded as capital assets at their estimated fair market <br />value at the date of donation. The City defines capital assets as those with an initial, <br />individual cost of $5,000 with an estimated useful life in excess of one year. The cost of <br />normal maintenance and repairs that do not add to the value of the asset or materially <br />extend asset lives are not capitalized. <br /> <br />In the case of the initial capitalization of general infrastructure (those reported by <br />governmental activities) the City chose to include all such items, regardless of their <br />acquisition date or amount. The City was able to estimate the historical cost for the initial <br />reporting of these assets through back-trending (i.e. estimating the current replacement <br />cost of the infrastructure to be capitalized and using an appropriate price-level index to <br />deflate the cost of the infrastructure to the acquisition year or estimated acquisition year. <br /> <br />Capital assets are recorded in the government-wide and proprietary fund financial <br />statements, but are not reported in the governmental fund financial statements. Interest <br />incurred during the construction phase of capital assets for business-type activities is <br />included as part of the capitalized value of the assets constructed. For the year ended <br />December 31, 2015, no interest was capitalized in connection with construction in <br />progress. <br /> <br />Capital assets are depreciated using the straight-line method over their estimated useful <br />lives. Land and construction in progress are not depreciated. The estimated useful lives <br />are as follows: <br /> <br /> Buildings 40 Years <br /> Other Improvements 5-25 Years <br /> Machinery and Equipment 5-15 Years <br /> Infrastructure - Streets 25 Years <br /> Infrastructure - Water and Sewer 50 Years <br /> <br />N. Compensated Absences Payable <br />It is the City’s policy to permit employees to accumulate earned by unused vacation and <br />sick pay benefits. All vacation pay is accrued when incurred in the government-wide and <br />proprietary fund financial statements. For the governmental activities, compensated <br />absences are generally liquidated by the General Fund. <br /> <br />A liability for these amounts is reported in governmental funds only if they have matured, <br />for example, as a result of employee resignations and retirements.