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CITY OF RAMSEY Notes to Financial Statements (continued) December 31, 2001 NOTE 1— SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) The county spreads all levies over taxable property. Such taxes become a lien on January 1 and are recorded as receivables by the City on that date. Revenue is accrued and recognized in the year collectible. Taxes which remain unpaid at December 31 are classified as delinquent taxes receivable. Revenue from property taxes which is not collected within 60 days of year-end is deferred since it is not available to meet obligations of the current year. Property taxes may be paid by taxpayers in two equal installments on May 15 and October 15. The County provides tax settlements to cities and other taxing districts three times a year; in July, December, and January. I. Special Assessments Special assessments represent the financing for public improvements paid for by the benefiting property owners. These assessments are recorded as receivables upon certification to the county. The corresponding revenue from the delinquent (unremitted) and deferred (certified but not yet levied) special assessments receivable is deferred until the year in which it becomes available (collected within 60 days of year-end). J. Inventories The General Fund inventory consists of postage and is recorded using the consumption method of accounting. The Water Utility Enterprise Fund inventory consists of water meters. All inventory is accounted for at cost on a specific identification basis. K. Property, Plant, and Equipment 1. General Fixed Assets Account Group — Fixed assets are valued at historical or estimated historical cost. All donated fixed assets are recorded at their estimated fair market value on the date received. No depreciation has been provided on general fixed assets. The costs of property, plant, and equipment are accounted for as current expenditures of the governmental fund types in the year purchased. The City has elected not to record infrastructure fixed assets in its accounting records. Interest incurred on the construction of fixed assets is not capitalized. 2. Proprietary Fund Type — Fixed assets of the Proprietary Funds are stated at cost, estimated cost, or, in the case of contributions, at fair market value at the time received. The City of Ramsey's capitalization policy states that all assets purchased for greater than $1,000 will be capitalized. Depreciation has been provided using the straight-line method over the estimated useful lives of assets, as follows: Buildings 50 years Improvements 20-50 years Machinery and equipment 5-10 years Distribution system 50 years -15-