1989 CAFR - Laserfiche WebLink

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CITY OF RAMSEY, MINNESOTA NOTES TO FINANCIAL STATEMENTS (Continued? December 31, 1989 Note 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) C. Measurement Focus {continued) Buildings and Improvements 50 Years Water and Sewer Lines 50 Years Mechanical 20 Years Equipment 5-10 Years Donated fixed assets are valued at the fair market value as of the date received. D. Basis of accounting refers to when revenue and expenditures or expenses are recognized in the accounts and reported in the financial statements. Basis of accounting relates to the timing of the measurements made, regardless of the measurement focus applied. Governmental Funds, Expendable Trust Funds, and Agency Funds are accounted for using the modified accrual basis of accounting. Governmental and Expendable Trust Fund revenue is recognized when it becomes measurable and available. Available means collectible within the current period or soon enough thereafter to be used to pay liabilities of the current period. Major revenue that is susceptible to accrual includes property taxes, special assessments, intergovernmental revenue, charges for services, and interest earned on investments. Major revenue that is not susceptible to accrual includes licenses and permits, fees, and miscellaneous revenue. Such revenue is recorded only when received because it is not measurable until collected. Expenditures are recognized under the modified accrual basis of accounting when the related fund liability is incurred, except for principal and interest on general long-term debt which is recognized when due. The Proprietary Funds are accounted for using the accrual basis of accounting. Revenue is recognized when it is earned and expenses are recognized when they are incurred. E. Budgets and Budgetarv Accountina The City follows these procedures in establishing the budgetary data reflected in the financial. statements. -16-