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13 CITY OF ST. ANTHONY, MINNESOTA NOTES TO FINANCIAL STATEMENTS (CONTINUED) DECEMBER 31, 1979 Note 1 - Summary of Significant Accounting Policies (Continued) Inventories - Inventories held by the proprietary funds (Liquor and Utility funds) are stated at cost based on the first -in, first -out valuation method, which is lower than market. The only other items of inventory would be a small quantity of supplies which are expensed as purchased. Property, plant and equipment - The property, plant and equipment of the proprietary funds (Liquor and Utility funds) are stated at cost. Depreciation has been provided using the straight-line method over the estimated useful lives of the assets. The depreciation on Utility Fund property, plant and equipment which was financed by special assessments, grants and contributions is charged to current income but then redistributed as a charge to the contributions in aid to construction account. The following is a summary of the property and equipment and the related estimated useful lives at December 31, 1979: Land Land and improvements Building and structures Machinery and equipment Furniture and fixtures Distribution and collection system Construction in progress 1,388,809 76,842 5724 771 52.233.426 992,818 15-50 29,569 $1.098.669 Budget - A plan of financial operation is set forth in the annual budget adopted by the City Council. The amounts shown in the financial statements represent the original budgeted amount and all revisions made during the year. Note 2 - General Fixed Assets General fixed assets owned by the City are not included in the financial statements since records thereof are not maintained. Generally accepted accounting principles require their inclusion in the financial statements. Note 3 - Contributions A substantial portion of the property, plant and equipment in the utility funds was acquired by contribution. When such assets are acquired they are credited to the contribution account and depreciation on contributed assets is charged to this account through the distribution of net income. The rates charged by the fund are not intended to generate sufficient revenue to recover the depreciation on contri- buted assets, and the replacement of these assets is expected to be financed primarily by future contributions. L_ Water Sewer Liquor Operating Operating Fund Fund Fund Years $ 2,232 $ 2,000 $ 3,645 17,191 5,006 20 459,817 665,202 9,000 15-40 221,326 95,567 63,637 4-20 24,205 5-15 1,388,809 76,842 5724 771 52.233.426 992,818 15-50 29,569 $1.098.669 Budget - A plan of financial operation is set forth in the annual budget adopted by the City Council. The amounts shown in the financial statements represent the original budgeted amount and all revisions made during the year. Note 2 - General Fixed Assets General fixed assets owned by the City are not included in the financial statements since records thereof are not maintained. Generally accepted accounting principles require their inclusion in the financial statements. Note 3 - Contributions A substantial portion of the property, plant and equipment in the utility funds was acquired by contribution. When such assets are acquired they are credited to the contribution account and depreciation on contributed assets is charged to this account through the distribution of net income. The rates charged by the fund are not intended to generate sufficient revenue to recover the depreciation on contri- buted assets, and the replacement of these assets is expected to be financed primarily by future contributions. L_