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CITY OF ORONO, MINNESOTA <br />Notes to Financial Statements (continued) <br />December 31, 1997 <br />. <br />♦ « <br />NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) <br />Property taxes may be paid by taxpayers in two equal installments on May 15 and October 15. The county <br />provides tax settlements to cities and other taxing districts several times throughout the year. <br />G. Special Assessments <br />Special assessments represent the financing for public improvements paid for by benefitting property owners. <br />These assessments are recorded as receivables upon certification to the county. The corresponding revenue <br />from the delinquent (unremitted) and deferred (certified but not yet levied) special assessments receivable <br />is deferred until the year in which it becomes available (collected within 60 days of year-end). <br />H. Inventories <br />Inventories are stated at the lower of cost or market on the first-in, first-out basis and are accounted for using <br />the consumption method. Inventory in the Golf Course Operating Fund consists of resale items. <br />I. Property, Plant, and Equipment <br />Fixed assets are stated at cost, estimated historical cost, or in the case of contributions, at fair market value <br />at the time received. <br />♦« <br />1. General Fixed Assets Account Group - No depreciation has been provided on general fixed assets. <br />The costs of property, plant, and equipment are accounted for as current expenditures cf the <br />governmental fund t>-pes in the year purchased. The City has elected not to record infrastructure <br />fixed assets in its accounting records. Interest incurred during construction of general fixed assets <br />is not capitalized. <br />2. Proprietary Fund Type - Fixed assets of the Proprietary Funds are depreciated using the straight- <br />line method over the estimated useful lives of the assets, as follows: <br />♦ ♦ <br />I • <br />I * <br />Buildings and improvements <br />Equipment <br />Distribution/collection system <br />25-50 years <br />3-20 years <br />10-75 years <br />Depreciation on contributed assets charged to operations is closed to the contributed equity account. <br />J. Liability for Compensated Absences <br />Vacation and sick leave expected to be liquidated with expendable available financial resources is reported <br />as an expenditure and a fund liability of the governmental fund type that will pay it. The remaining portion <br />of such obligations is recorded in the General Long-Term Debt Accoimt Group. The unused vacation of the <br />Proprietary Funds is included in accrued liabilities of the respective fund. <br />t • <br />-30-