07-27-1998 Council Packet - Laserfiche WebLink

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CITY OF ORONO, MINNESOTA Notes to Financial StatCiHents (continued) December 31, 1997 NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) 1. Revenue Recognition - Revenue is recognized when it becomes measurable and available. "Measurable" means the amount of the transaction can be determined and "available" means collectible within the current period or soon enough thereafter to be used to pay liabilities of the current period. Major revenue that is susceptible to accrual includes property taxes, special assessments, intergovernmental revenue, charges for services, and interest earned on investments. Other revenue that is not susceptible to accrual includes licenses and permits, fees, and miscellaneous revenue. Such revenue is recorded only when received because it is not measurable until collected. 2. Recording of Expenditures - Expenditures are recognized under the modified accrual basis of accounting when the related fund liability is incurred, except for principal and interest on general long-term debt which is recognized when due. Proprietary Funds are accounted for using the accrual basis of accounting. Under this method, revenues are recognized when earned and expenses are recognized when they are incurred. The City applies only those applicable pronouncements of the Financial Accounting Standards Board issued on or before November 30, 1989 in accounting and reporting for its proprietary operations. E. Cash and Investments Cash and temporary investments u'^clude balances from all funds that are combined and invested to the extent available in various securities authorized by state law. Earnings on pooled investments are allocated to the respective funds '>n ♦he basis of applicable cash balance participation by each fund. Cash and investments held by trustee includes debt service funds held in a trust account as required by the 1991 Public Facilities Revenue Bond debt issue. Investments are stated at cost or amortized cost. F. Property Taxes Property tax levies are set up by the City Council in October of each year, and are certified to Hennepin County for collection in the following year. In Minnesota, counties act as collection agents for all property taxes. A portion of the property taxes levied is paid by the State of Mirmesota through Homestead and Agricultural Credit Aid (HACA), which is included in intergovernmental revenue in the financial statements. The county spreads all levies over taxable property. Such taxes become a lien on January 1 and arc recorded as receivables by the City on that date. Revenue is accrued and recognized in the year collectible. Taxes which remain unpaid at December 31 are classified as delinquent taxes receivable. Revenue from property taxes which is not collected within 60 days of year-end is deferred since it is not available to meet obligations of the current year. ■w -29-