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NOTE 1— SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) <br />F. Receivables <br />All miscellaneous accounts receivable are presented net of an allowance for doubtful accounts. Since the <br />City is generally able to certify delinquent amounts to the county for collection as special assessments, no <br />allowance for uncollectible accounts has been provided on these receivables. The only receivables not <br />expected to be fully collected within one year are property taxes and special assessments receivable. <br />G. Property Taxes <br />Property tax levies are set by the City Council by December of each year and are certified to the County <br />Auditor for collection in the following year. In Minnesota, counties act as collection agents for all property <br />taxes. A portion of the property taxes levied is paid by the state of Minnesota through various tax credits, <br />which is included in intergovernmental revenue in the financial statements. <br />The county spreads all levies over taxable property. Such taxes become a lien on January 1 and are recorded <br />as receivables by the City on that date. Real property taxes may be paid by taxpayers in two equal <br />installments on May 15 and October 15. Personal property taxes are due in full on May 15. The county <br />provides tax settlements to cities and other taxing districts several times a year. Taxes which remain unpaid <br />at December 31 are classified as delinquent taxes receivable. <br />H. Special Assessments <br />Special assessments represent the financing for public improvements paid for by the benefiting property <br />owners. These assessments are recorded as delinquent (levied but unremitted) or deferred (certified but not <br />yet levied) special assessments receivable. <br />I. Prepaid items <br />Certain payments to vendors reflect costs applicable to future accounting periods and are recorded as <br />prepaid items in both government -wide and fund financial statements. In governmental funds, prepaids are <br />recognized by the consumption method, proportionately over the periods that service is provided. <br />J. Interfund Receivables and Payables <br />Activity between funds that is representative of lending or borrowing arrangements is reported as either <br />"due to/from other funds" (current portion) or "advances to/from other funds." All other outstanding <br />balances between funds are reported as "due to/from other funds." Any residual balances outstanding <br />between the governmental activities and business -type activities are reported in the government -wide <br />financial statements as "internal balances." <br />K. Deferred Inflows of Resources <br />In addition to liabilities, the Statement of Financial Position will sometimes report a separate section for <br />deferred inflows of resources. This separate financial statement element, deferred inflows of resources, <br />represents an acquisition of net position that applies to a future period(s) and so will not be recognized as <br />an inflow of resources (revenue) until that time. The City has only one type of item, which arises only under <br />a modified accrual basis of accounting that qualifies for reporting in this category. Accordingly, the item, <br />unavailable revenue, is reported only in the governmental funds Balance Sheet. The governmental funds <br />report unavailable revenue from three sources: property taxes, special assessments, and notes receivable. <br />These amounts are deferred and recognized as an inflow of resources in the period the amounts become <br />available. <br />67 <br />