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<br /> <br />City of Orono, Minnesota <br />Notes to the Financial Statements <br />December 31, 2021 <br /> <br />Note 1: Summary of Significant Accounting Policies (Continued) <br /> <br /> <br />Deferred Inflows of Resources <br /> <br />In addition to liabilities, the statement of net position and fund financial statements will sometimes report a separate <br />section for deferred inflows of resources. This separate financial statement element, deferred inflows of resources, <br />represents an acquisition of net position that applies to a future period(s) and so will not be recognized as an inflow of <br />resources (revenue) until that time. The City has two types of items, which arise only under a modified accrual basis of <br />accounting that qualifies as needing to be reported in this category. Accordingly, one of the items, unavailable revenue, is <br />reported only in the governmental funds balance sheet. The governmental funds report unavailable revenues from three <br />sources: property taxes, special assessments and intergovernmental. These amounts are deferred and recognized as an <br />inflow of resources in the period that the amounts become available. <br /> <br />Furthermore, the City has additional items which qualify for reporting in this category on t he statement of net position. <br />The items, deferred pension resources and deferred other postemployment benefit resources, are reported only in the <br />statement of net position and results from actuarial calculations involving net differences between projected and actual <br />earnings on plan investments and changes in proportions. <br /> <br />Net Position <br /> <br />Net position represents the difference between assets and deferred outflows of resources and liabilities and deferred <br />inflows of resources. Net position is displayed in three components: <br /> <br />a. Net investment in capital assets - Consists of capital assets, net of accumulated depreciation reduced by any <br />outstanding debt attributable to acquire capital assets. <br /> <br />a. Restricted net position - Consists of net position balances restricted when there are limitations imposed on their <br />use through external restrictions imposed by creditors, grantors, laws or regulations of other governments. <br /> <br />b. Unrestricted net position - All other net position balances that do not meet the definition of “restricted” or “net <br />investment in capital assets”. <br /> <br />When both restricted and unrestricted resources are available for use, it is the City’s policy to use restricted resources <br />first, then unrestricted resources as they are needed. <br /> <br /> <br />DRAFT <br />60