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CITY OF LITTLE CANADA, MINNESOTA <br />RECONCILIATION OF THE STATEMENT OF REVENUES, <br />EXPENDITURES AND CHANGES IN FUND BALANCES OF <br />GOVERNMENTAL FUNDS <br />For The Year Ended December 31, 2005 <br />Statement 5 <br />Amounts reported for goverrunental activities in the <br />statement of activities are different because: <br />Net changes in fund balances - total governmental funds (Statement 4) <br />Governmental funds report capital outlays as expenditures. However, in the <br />statement of activities the cost of those assets is allocated over their estimated <br />useful lives and reported as depreciation expense. This is the amount by which <br />capital outlays exceeded depreciation in the current period. <br />2005 2004 <br />($36,200) ($77,592) <br />2 ,338,654 420,686 <br />Donations of capital assets increase net assets in the statement of activities, but do <br />not appear in the governmental funds because they are not financial resources. 135,348 <br />Revenues in the statement of activities that do not provide current financial <br />resources are not reported as revenues in the fimds. <br />795,144 808,087 <br />The issuance of long -term debt (e.g., bonds, leases) provides current financial <br />resources to governmental funds, while the repayment of the principal of <br />long -term debt consumes the current financial resources of governmental funds. <br />Neither transaction, however, has any effect on net assets. This amount is the net <br />effect of these differences in the treatment of long -term debt and related items. 230,000 135,000 <br />Some expenses reported in the statement of activities do not require the use of <br />current financial resources and, therefore, are not reported as expenditures in <br />governmental funds. (5,592) 13,566 <br />Change in net assets of governmental activities (Statement 2) <br />A -6 <br />$3,457,154 $1,301,751 <br />