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CITY OF LINO LAKES, MINNESOTA <br />Page 9 of 19 <br />NOTES TO FINANCIAL STATEMENTS <br />December 31, 1988 <br />NOTE 2 DETAIL NOTES ON ALL FUND AND ACCOUNT GROUPS (Continued) <br />FIXED ASSETS (continued) <br />GENERAL (cont.) <br />The City does not maintain detailed records nor accounting controls over general fixed assets. The <br />amounts presented in the financial statements represent partial accumulations of historical <br />accounting records without regard to physical listings. <br />PROPRIETARY FUNDS <br />Fixed assets of the proprietary funds (Water and Sewer) are stated at cost, estimated cost, or in the <br />case of contributions, at fair market value at the time received. Depreciation has been provided <br />using the straight -line method over the estimated useful lives of assets, as follows: <br />Depreciation <br />Assets Depreciable Lives 1988 1987 <br />Purchased assets: <br />Water 5 - 25 years $645 $779 <br />Sewer 5 - 25 years 168 303 <br />Contributed assets: <br />Water 20 - 50 years 9,058 9,058 <br />Sewer 20 - 50 years 13,472 13,472 <br />Totals $23,343 $23,612 <br />Fixed assets of the water and sewer utility operations include the water distribution system and <br />sewage collection system. These systems have been wholly (or substantially) financed by non- <br />operating funds (special assessments, general taxes, Federal and State grants, and other sources) <br />and contributions to the sewer and water operating funds. City policy is to finance these assets by <br />the sources indicated rather than by user charges. Accordingly, the water and sewer user rates are <br />not established at levels sufficient to cover depreciation on these assets. <br />Depreciation on these assets is shown in the operating statements; however, the depreciation is <br />eventually transferred against the contribution account rather than retained earnings in accordance <br />with generally accepted accounting principles. Consequently, the contribution account reflects the <br />net book value of contributed assets rather than the original cost of such assets. <br />A summary of proprietary fund assets at December 31, 1988 is as follows: <br />Well $18,500 <br />Buildings and Structures 48,690 <br />Machinery and Equipment 17,421 <br />Water and Sewer Lines 3,197,305 <br />Total 3,281,916 <br />Less: Accumulated Depreciation (259,560) <br />Net Fixed Assets $3,022,356 <br />1 <br />1 <br />1 <br />1 <br />1 <br />1 <br />1 <br />1 <br />1 <br />1 <br />1 <br />1 <br />1 <br />1 <br />1 <br />1 <br />1 <br />1 <br />1 <br />