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CITY OF LINO LAKES, MINNESOTA <br />NOTES TO FINANCIAL STATEMENTS <br />December 31, 2023 <br /> <br /> <br /> <br /> <br />L. INTERFUND TRANSACTIONS <br /> <br />During the course of operations, numerous transactions occur between individual funds for goods provided or services <br />rendered. Interfund services provided and used are accounted for as revenues, expenditures or expenses. Transactions that <br />constitute reimbursements to a fund for expenditures / expenses initially made from it that are properly applicable to another <br />fund, are recorded as expenditures/expenses in the reimbursing fund and as reductions of expenditures/expenses in the fund <br />that is reimbursed. <br /> <br />The City provides temporary advances to funds that have insufficient cash balances by means of an advance from another <br />fund. Such advances are classified as “advances to/from other funds.” Long-term interfund loans are classified as “interfund <br />loan receivable/payable.” Any residual balances outstanding between the governmental activities and business-type activities <br />are reported in the government-wide financial statements as “internal balances.” All other interfund transactions are reported <br />as transfers. <br /> <br /> <br />M. CAPITAL ASSETS <br /> <br /> Capital assets, which include property, plant, equipment, and infrastructure assets (e.g. roads, sidewalks, drainage systems, <br />water and sewer systems, and similar items) are reported in the applicable governmental or business-type activities columns <br />in the government-wide financial statements. Capital assets are defined by the City as assets with an estimated useful life in <br />excess of one year, which have an individual value equal to or greater than the capitalization thresholds for each asset class as <br />follows: <br /> <br />Land $10,000 <br />Buildings and building improvements $50,000 <br />Improvements other than buildings (land improvements) $25,000 <br />Machinery and equipment $10,000 <br />Infrastructure and other improvements $100,000 <br />Other assets $10,000 <br /> <br />Such assets are recorded at historical cost or estimated historical cost if purchased or constructed. Donated capital assets are <br />recorded at acquisition value at the date of donation. All existing City infrastructure has been capitalized regardless of date <br />placed in service. <br /> <br />The costs of normal maintenance and repairs that do not add to the value of the asset or materially extend assets lives are not <br />capitalized. Major outlays for capital assets and improvements are capitalized as projects are constructed. <br /> <br /> Depreciation on exhaustible assets is recorded as an allocated expense in the Statement of Activities with accumulated <br />depreciation reflected in the Statement of Net Position. Capital assets are depreciated using the straight-line method over <br />their estimated useful lives. Since surplus assets are sold for an immaterial amount when declared as no longer needed for <br />City purposes, no salvage value is taken into consideration for depreciation purposes. Useful lives vary from 5 to 40 years <br />for buildings, office furniture and equipment, vehicles, machine shop and equipment and other assets, and 15 to 50 years for <br />infrastructure and other improvements. <br /> <br /> <br />N. COMPENSATED ABSENCES <br /> <br /> It is the City’s policy to permit employees to accumulate earned but unused vacation, PTO (Personal Time Off), extended <br />leave and sick pay benefits. All vacation pay and PTO and the portion of sick pay allowable as severance is accrued in the <br />government-wide and proprietary fund financial statements. The current portion is calculated based on historical trends. <br /> <br /> <br />52 <br />59