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NOTE 1— SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) <br />O. Net Assets <br />Net assets represent the difference between assets and liabilities in the government -wide and Proprietary <br />Funds financial statements. Net assets invested in capital assets, net of related debt consists of capital <br />assets, net of accumulated depreciation, reduced by the outstanding balance of any long -term debt used to <br />build or acquire the capital assets. Net assets as reported on government -wide and Proprietary Funds <br />financial statements are reported as restricted when there are limitations imposed on their use through <br />external restrictions imposed by creditors, grantors, or laws or regulations of other governments. <br />P. Fund Balance Classifications <br />In the fund financial statements, governmental funds report fund balance in classifications that disclose <br />constraints for which amounts in those funds can be spent. These classifications are as follows: <br />Nonspendable: Consists of amounts that are not in spendable form, such as prepaid items. <br />Restricted: Consists of amounts related to externally imposed constraints established by creditors, <br />grantors or contributors; or constraints imposed by state statutory provisions. <br />Committed: Consists of internally imposed constraints. These constraints are established by <br />Resolution of the City Council. <br />Assigned: Consists of internally imposed constraints. These constraints reflect the specific <br />purpose for which it is the city's intended use. These constraints are established by the City <br />Council and /or management. Pursuant to City Council Resolution, the City's Finance Director is <br />authorized to establish assignments of fund balance. <br />Unassigned: The residual classification for the general fund and also reflects negative residual <br />amounts in other funds. <br />Q. Restricted Assets <br />Restricted assets are cash and cash equivalents and the related interest receivable whose use is limited by <br />legal requirements such as a bond indenture. Restricted assets are reported only in the government -wide <br />financial statements. In the fund financial statements these assets have been reported as "cash and <br />investments held by trustee" and the interest receivable is included within "accounts and interest <br />receivable ". <br />R. Budgets and Budgetary Accounting <br />Each fall the City Council adopts a General Fund budget for the following fiscal year beginning <br />January 1. The City has established budgetary control at the function level. Budget appropriations lapse <br />at year -end. In addition, an annual budget is legally adopted for the Economic Development Authority, a <br />non major special revenue fund, and the Housing and Redevelopment Authority (HRA) a major special <br />revenue fund. <br />The government's department heads may make transfers of appropriations within a function. Transfers of <br />appropriations between functions require the approval of the council. All the appropriations for the <br />Housing and Redevelopment Authority are approved by their governing board. The Economic <br />Development Authority budget is recommended by their board and final approval comes from City <br />Council. <br />67 <br />