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CITY OF LITTLE CANADA, MINNESOTA <br />NOTES TO BASIC FINANCIAL STATEMENTS <br />DECEMBER 31, 2022 <br /> <br /> <br /> <br />(42) <br /> <br />NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) <br />L. Capital Assets (Continued) <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 to 25 Years <br />Machinery and Equipment 5 to 15 Years <br />Infrastructure – Streets 25 Years <br />Infrastructure – Water and Sewer 50 Years <br /> <br />M. 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. <br /> <br />N. Long-Term Obligations <br />In the government-wide and proprietary fund financial statements, long-term debt and <br />other long-term obligations are reported as liabilities. Bond premiums and discounts, if <br />material, are amortized over the life of the bonds using the straight-line method. Bond <br />issuance costs are expensed as incurred. <br /> <br />In the governmental fund financial statements, long-term debt and other long-term <br />obligations are not reported as liabilities. The face amount of debt issued is reported as <br />other financing sources. Premiums or discounts on debt issuances are reported as other <br />financing sources or uses, respectively. Issuance costs, whether or not withheld from the <br />actual debt proceeds received, are reported as debt service expenditures. <br /> <br />O. Net Pension Liability <br />For purposes of measuring the net pension liability, deferred outflows/inflows of <br />resources, and pension expense, information about the fiduciary net position of the <br />Public Employees Retirement Association (PERA) and additions to/deductions from <br />PERA’s fiduciary net position have been determined on the same basis as they are <br />reported by PERA. For this purpose, plan contributions are recognized as of employer <br />payroll paid dates and benefit payments, and refunds are recognized when due and <br />payable in accordance with the benefit terms. Investments are reported at fair value.