Annual Financial Report 12/31/1987

Home Search

Page 8 of 19 CITY OF LINO LAKES, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 1987 NOTE 2 - DETAIL NOTES ON ALL FUND AND ACCOUNT GROUPS (CONTINUED) INVENTORIES - PROPRIETARY TYPE FUNDS Inventories of the proprietary funds are stated at the lower -of -cost or market cost being determined by the first -in, first -out method. FIXED ASSETS - GENERAL General fixed assets are recorded as expenditures of the governmental funds at the time of purchase. Such assets are capitalized, at cost, in the general fixed asset group of accounts except for certain improvements (roads, bridges, curbs, gutters, streets, sidewalks, drainage systems and lighting systems) which are not capitalized. Gifts or contributions are recorded in general fixed assets at fair market value at the time received. No depreciation has been provided on general fixed assets. A summary of changes in General Fixed Assets is as follows: Balance Balance 1/1/87 Additions Deletions 12/31/87 Land $298,943 Buildings & improvements 516,163 Wells 6,216 Furniture and equipment 487.879 Totals $103.230 $42.596 $298,943 516,163 6,216 548.513 $7,585,504 $103,230 $42,596 1,369,835 =11111119111110=111111111 ====== The City does not maintain detailed records nor accounting controls over general fixed assets. The amounts presented in the financial statements represent partial accumulations of historical accounting records without regard to physical listings. FIXED ASSETS - PROPRIETARY FUNDS Fixed assets of the proprietary funds (Water and Sewer) are stated at cost, estimated cost, or in the case of contributions, at fair market value at the time received. Depreciation has been provided using the straight-line method over the estimated useful lives of assets, as follows: Assets Purchased: Water and sewer Contributed: Water and sewer Depreciable Lives 5 - 25 Years 20 - 50 Years Depreciation 1987 1986 $1,082 $984 22.530 22.530 Totals $23,612 $23,514 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 contributions 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 principles. Consequently, the contribution account reflects the net book value of contributed assets rather than the original cost of such assets.