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CITY OF LITTLE CANADA, MINNESOTA <br />NOTES TO BASIC FINANCIAL STATEMENTS <br />DECEMBER 31, 2021 <br /> <br /> <br /> <br /> <br />NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) <br />M. Compensated Absences Payable <br />It is the City’s policy to permit employees to accumulate earned but unused vacation pay benefits. <br />All vacation pay is accrued when incurred in the government-wide and proprietary fund financial <br />statements. For the governmental activities, compensated absences are generally liquidated by the <br />General Fund. <br /> <br />A liability for these amounts is reported in governmental funds only if they have matured, for <br />example, as a result of employee resignations and retirements. <br /> <br />N. Long-Term Obligations <br />In the government-wide and proprietary fund financial statements, long-term debt and other long- <br />term obligations are reported as liabilities. Bond premiums and discounts, if material, are amortized <br />over the life of the bonds using the straight-line method, which approximates the effective interest <br />method. Bond issuance costs are expensed as incurred. <br /> <br />In the governmental fund financial statements, long-term debt and other long-term obligations are <br />not reported as liabilities. The face amount of debt issued is reported as other financing sources. <br />Premiums or discounts on debt issuances are reported as other financing sources or uses, <br />respectively. Issuance costs, whether or not withheld from the actual debt proceeds received, are <br />reported as debt service expenditures. <br /> <br />O. Net Pension Liability <br />For purposes of measuring the net pension liability, deferred outflows/inflows of resources, and <br />pension expense, information about the fiduciary net position of the Public Employees Retirement <br />Association (PERA) and additions to/deductions from PERA’s fiduciary net position have been <br />determined on the same basis as they are reported by PERA except that PERA’s fiscal year-end is <br />June 30. For this purpose, plan contributions are recognized as of employer payroll paid dates and <br />benefit payment and refunds are recognized when due and payable in accordance with the benefit <br />terms. Investments are reported at fair value. For the governmental activities, the net pension <br />liability will be liquidated through the General Fund. <br /> <br /> <br />56