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CITY OF ORONO <br />NOTES TO BASIC FINANCIAL STATEMENTS <br />DECEMBER 31, 2015 <br /> <br /> <br />(32) <br /> <br />NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) <br />G. Receivables <br />All miscellaneous accounts receivable are shown at net of an allowance for doubtful <br />accounts. Since the City is generally able to certify delinquent utility bills to the county for <br />collection as special assessments, no allowance for uncollectible accounts has been <br />provided on those receivables. The only receivables not expected to be fully collected <br />within one year are property taxes and special assessments receivable. <br /> <br />H. Property Taxes <br />Property tax levies are set by the City Council by December of each year, and certified <br />to the County Auditor for collection in the following year. In Minnesota, counties act as <br />collection agents for all property taxes. <br /> <br />A portion of the property taxes levied may be paid by the State of Minnesota through <br />various tax credits, which are included in intergovernmental revenue in the financial <br />statements. <br /> <br />The county spreads all levies over taxable property. Such taxes become a lien on <br />January 1 and are recorded as receivables by the City on that date. Real property taxes <br />may be paid by taxpayers in two equal installments on May 15 and October 15. Personal <br />property taxes are due in full on May 15. The county provides tax settlements to cities <br />and other taxing districts several times a year. Taxes which remain unpaid at <br />December 31 are classified as delinquent taxes receivable. <br /> <br />I. Special Assessments <br />Special assessments represent the financing for public improvements paid for by the <br />benefiting property owners. These assessments are recorded as delinquent (levied but <br />unremitted) or deferred (certified but not yet levied) special assessments receivable. <br /> <br />J. Prepaid Items <br />Certain payments to vendors reflect costs applicable to future accounting periods and <br />are recorded as prepaid items in both government-wide and fund financial statements. <br />The City utilizes the consumption method when recording prepaid items. <br /> <br />K. Inventories <br />The City’s governmental funds utilize the consumption method for accounting for <br />inventory and all inventories of the City are stated at the lower of cost or market on the <br />first-in, first-out basis. <br /> <br />L. Interfund Receivables and Payables <br />Activity between funds that is representative of lending or borrowing arrangements is <br />reported as either "due to/from other funds" (current portion) or "advances to/from other <br />funds." All other outstanding balances between funds are reported as "due to/from other <br />funds." Any residual balances outstanding between the governmental activities and <br />business-type activities are reported in the government-wide financial statements as <br />"internal balances."