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Vow <br />WNW <br />lEw <br />Ilwat <br />CITY OF LINO LAKES, MINNESOTA <br />NOTES TO FINANCIAL STATEMENTS <br />December 31, 2003 <br />Note 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) <br />I. SPECIAL ASSESSMENT REVENUE RECOGNITION (CONTINUED) <br />Once a special assessment roll is adopted, the amount attributed to each parcel is a lien upon that <br />property until full payment is made or the amount is determined to be excessive by the City Council or <br />court action. If special assessments are allowed to go delinquent, the property is subject to tax forfeit <br />sale and the first proceeds of that sale (after costs, penalties and expenses of sale) are remitted to the <br />City in payment of delinquent special assessments. Generally, the City will collect the full amount of <br />its special assessments not adjusted by City Council or court action. Pursuant to State Statutes, a <br />property shall be subject to a tax forfeit sale after three years unless it is homesteaded, agricultural or <br />seasonal recreational land in which event the property is subject to such sale after five years. <br />J. INVENTORIES <br />The original cost of materials and supplies has been recorded as expenditures /expenses at the time of <br />purchase of both the Governmental and Proprietary Funds. These funds do not maintain material <br />amounts of materials and supplies. <br />K. INTERFUND RECEIVABLES /PAYABLES <br />During the course of operations, numerous transactions occur between individual funds for goods <br />provided or services rendered. These receivables are classified as interfund receivables and payables <br />on the governmental fund balance sheets. The non - current portion of interfund loans are reported as <br />"advances to /from other funds." Advances between funds are offset by a fund balance reserve account <br />in applicable governmental funds to indicate they are not available for appropriation and are not <br />expendable from available financial resources. <br />L. LAND HELD FOR RESALE <br />These assets are recorded in the governmental fund, which purchased them at the lower of cost or <br />market. <br />M. CAPITAL ASSETS <br />Capital assets, which include property, plant, equipment, and infrastructure assets (e.g. roads, <br />sidewalks, street lights, and similar items) are reported in the applicable governmental or business -type <br />activities columns in the government -wide financial statements. Capital assets are recorded at historical <br />cost or estimated historical cost if purchased or constructed. The cost of normal maintenance and <br />repairs that do not add to the value of the asset or materially extend asset lives are not capitalized. <br />Major outlays for capital assets and improvements are capitalized as projects are constructed. <br />Depreciation on exhaustible assets is recorded as an allocated expense in the Statement of Activities <br />with accumulated depreciation reflected in the Statement of Net Assets. Capital assets are depreciated <br />using the straight -line method over their estimated useful lives. Since surplus assets are sold for an <br />immaterial amount when declared as no longer needed for City purposes, no salvage value is taken into <br />consideration for depreciation purposes. Useful lives vary from 3 to 30 years for Buildings, Office <br />Furniture and Equipment, Vehicles, Machine Shop and Equipment and Other assets, and 25 to 50 years <br />for Infrastructure. Capital assets not being depreciated include land. <br />38 <br />