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CITY OF LINO LAKES, MINNESOTA <br />NOTES TO FINANCIAL STATEMENTS <br />December 31, 1997 <br />Note 21 PRIOR PERIOD ADJUSTMENTS <br />DEPRECIATION CORRECTION <br />During 1997, certain Enterprise Fund fixed asset records were corrected in conjunction with the City's <br />conversion to a new fixed asset accounting system. The net result of this correction was to increase <br />accumulated depreciation by a total of $19,533. Retained earnings at January 1, 1996 have been restated for <br />this correction. <br />CONTRACTUAL OBLIGATIONS <br />A review of contractual agreements with bordering cities revealed previously unrecorded liabilities/assets <br />pertaining to prior years as follows: <br />Connection and sewer use charges. The City of Lino Lakes was determined to be liable to a bordering City <br />for certain connection charges collected by the City of Lino Lakes. It was also determined that the City of <br />Lino Lakes had overpaid sewer use charges to the same city. In May of 1998, the two cities executed a <br />settlement agreement requiring the City of Lino Lakes to reimburse the bordering city the net amount of <br />$390,683 calculated as follows: <br />Connection <br />Charges - Sewer <br />Applicable Including Use Net <br />Year Penalty Charge Liability <br />1987 - 1995 $397,152 ($51,594) $345,558 <br />1996 52,910 (22,957) 29,953 <br />1997 37,573 (26,187) 11,386 <br />1998 10,739 (6,953) 3,786 <br />Totals <br />$498,374 ($107,691) $390,683 <br />The 1996 fmancial statements have been restated to account for the net liability through December 31, <br />1996 of $375,511. The 1997 financial statements include the 1997 portion listed above, as well as the <br />cumulative liability of $386,897. <br />In accordance with Minnesota Statute 6.67, the failure to record the liabili ty in the City's prior year <br />fmancial statements and the failure to make timely payment in accordance with the terms of the agreement, <br />were reported to the Office of the State Auditor and the Anoka County Attorney. <br />Assessment Collection. The City of Lino Lakes was determined to be liable to a bordering city for certain <br />connection charges related to prior years totaling $6,419. Fund balance at January 1, 1996 has been <br />restated for this change. <br />52 <br />