Annual Financial Report 12/31/1986

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CITY OF LINO LAKES, MINNESOTA Page 10 of 19 NOTES TO FINANCIAL STATEMENTS December 31, 1986 Note 2 - DETAIL NOTES ON ALL FUND AND ACCOUNT GROUPS (Continued) FIXED ASSETS - PROPRIETARY FUNDS (Continued) Fixed assets of the water and sewer utility operations include the water distribution system and sewage collection system. These systems have been wholly (or substantially) financed by non - operating funds (special assessments, general taxes, Federal and State grants, and other sources) and contributed to the sewer and water operating funds. City policy is to finance these assets by the sources indicated rather than by user charges. Accordingly, the water and sewer user rates are not established at levels sufficient to cover depreciation on these assets. Depreciation on these assets is shown in the operating statements; however, the depreciation is eventually transferred against the contribution account rather than retained earnings in accordance with generally accepted accounting prin- ciples. Consequently, the contribution account reflects the net book value of contributed assets rather than the original cost of such assets. A summary of proprietary fund assets at December 31, 1986 is as follows: Well Buildings Machinery Water and $ 18,500 and structures 48,690 and equipment 15,561 sewer lines 973,802 Total 1,056,553 Less: Accumulated depreciation (212,604) Net fixed assets $ 843,949 CITY INDEBTEDNESS The following is a schedule of long -term debt transactions of the City for the year ended December 31, 1986. Principal payable at January 1 Additions Deletions Principal payable at December 31 Assessments Payable on City Property Contract Payable $ 129,820 $ 1,539 18,276 80,000 1,539 $ 148,096 $ 80,000 General Obligation $ 107,500 35,000 Special Assessment $2,694,140 475,000 114,820 $ 72,500 $3,054,320 Total $2,932,999 573,276 151,359 $3,354,916