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City of Orono, Minnesota <br />Notes to the Financial Statements <br />December 31, 2024 <br /> <br />Note 1: Summary of Significant Accounting Policies (Continued) <br /> <br />C. Measurement Focus, Basis of Accounting and Financial Statement Presentation <br /> <br />The government-wide financial statements are reported using the economic resources measurement focus and the <br />accrual basis of accounting, as are the proprietary fund financial statements. Revenues are recorded when earned and <br />expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. Property taxes are <br />recognized as revenues in the year for which they are levied. Grants and similar items are recognized as revenue as soon <br />as all eligibility requirements imposed by the provider have been met. <br />Governmental fund financial statements are reported using the current financial resources measurement focus and the <br />modified accrual basis of accounting. Revenues are recognized as soon as they are both measurable and available. <br />Revenues are considered to be available when they are collectible within the current period or soon enough thereafter to <br />pay liabilities of the current period. For this purpose, the City considers revenues to be available if they are collected within <br />60 days of the end of the current fiscal period. Expenditures generally are recorded when a liability is incurred, as under <br />accrual accounting. However, debt service expenditures, as well as expenditures related to compensated absences, <br />pensions, and claims and judgments, are recorded only when payment is due. <br />Property taxes, franchise taxes, licenses and interest associated with the current fiscal period are all considered to be <br />susceptible to accrual and so have been recognized as revenues of the current fiscal period. Only the portion of special <br />assessments receivable due within the current fiscal period is considered to be susceptible to accrual as revenue of the <br />current period. All other revenue items are considered to be measurable and available only when cash is received by the <br />City. <br />Revenue resulting from exchange transactions, in which each party gives and receives essentially equal value, is recorded <br />on the accrual basis when the exchange takes place. On a modified accrual basis, revenue is recorded in the year in which <br />the resources are measurable and become available. <br />Non-exchange transactions, in which the City receives value without directly giving equal value in return, include property <br />taxes, grants, entitlement and donations. On an accrual basis, revenue from property taxes is recognized in the year for <br />which the tax is levied. Revenue from grants, entitlements and donations is recognized in the year in which all eligibility <br />requirements have been satisfied. Eligibility requirements include timing requirements, which specify the year when the <br />resources are required to be used or the year when use is first permitted, matching requirements, in which the City must <br />provide local resources to be used for a specified purpose, and expenditure requirements, in which the resources are <br />provided to the City on a reimbursement basis. On a modified accrual basis, revenue from non-exchange transactions <br />must also be available before it can be recognized. <br />Unearned revenue arises when assets are recognized before revenue recognition criteria have been satisfied. Grants and <br />entitlements received before eligibility requirements are met are also recorded as unearned revenue. <br />The preparation of financial statements in conformity with accounting principles generally accepted in the United States <br />of America requires management to make estimates and assumptions that affect certain reported amounts and <br />disclosures. Accordingly, actual results could differ from those estimates. <br />54 81