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NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) <br /> <br />Capital assets are recorded in the government-wide and Proprietary Fund financial statements, but are not <br />reported in the Governmental Fund financial statements. Interest incurred during the construction phase <br />of capital assets for business-type activities is included as part of the capitalized value of the assets <br />constructed. Capital assets are depreciated using the straight-line method over their estimated useful <br />lives. Land and construction in progress are not depreciated. Useful lives vary from 15 to 50 years for <br />buildings and improvements, 5 to 10 years for machinery, vehicles, and equipment, and 20 to 50 years for <br />collection and distribution systems and other infrastructure. <br /> <br />L. Compensated Absences Payable <br /> <br />Certain city employees earn personal time off, vacation, compensation time, and sick leave at various <br />rates based on longevity. These compensated absences are paid to an employee leaving in good standing, <br />at their current rate of pay, with the exception of sick leave in which one-third is paid to the departing <br />employee. Compensated absences payable are accounted for as long-term liabilities as described in the <br />following section. <br /> <br />M. Long-Term Liabilities <br /> <br />In the government-wide and Proprietary Fund financial statements, long-term debt and other long-term <br />obligations are reported as liabilities. If they are material, bond premiums, discounts, and issuance costs <br />are deferred and amortized over the life of the bonds using the straight-line method° <br /> <br />In the Governmental Fund financial statements, long-term debt and other long-term obligations are not <br />reported as liabilities until due. The face amount of debt issued is reported as other financing sources. <br />Premiums or discounts on debt issuances are reported as other financing sources or uses, respectively. <br />Issuance costs, whether or not withheld from the actual debt proceeds received, are reported as debt <br />service expenditures. <br /> <br />N. Assets Held for Resale <br /> <br />Assets held for resale represent various property purchases made by the City with the intent to sell in <br />order to increase tax base or to attract new businesses. These assets are stated at the lower of cost or net <br />realizable value. <br /> <br />O. Net Assets <br /> <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 are reported as restricted when there are limitations imposed <br />on their use through external restrictions imposed by creditors, grantors, or laws or regulations of other <br />governments~ <br /> <br />P. Restricted Assets <br /> <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 city-wide financial <br />statements. In the fund financial statements these assets have been reported as "cash and investments <br />held by trustee" and the interest receivable is included within "accounts and interest receivable." <br /> <br />-33- <br /> <br /> <br />