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CITY OF PARIS, TEXAS <br />Notes to Financial Statements (Continued) <br />September 30, 2021 <br />I. Summary of Significant Accounting Policies (Continued) <br />G. Assets, Liabilities, and Equity (Continued) <br />5. Capital Assets (Continued) <br />Donated capital assets, donated works of art and similar items, and capital assets received in a service <br />concession arrangement are reported at acquisition value at the date of donation. Infrastructure acquired <br />prior to the implementation of GASB 34 are included in the financial statements. <br />The cost of normal maintenance and repairs that do not add to the value of the asset or materially extend <br />assets lives are not capitalized. <br />Major outlays for capital assets and improvements are capitalized as projects are constructed. Interest <br />incurred during the construction phase of capital assets of business -type activities is included as an expense <br />during the period incurred. <br />Property, plant, and equipment of the primary government, as well as the component unit is depreciated <br />using the straight-line method over the following estimated useful lives: <br />Buildings and Improvements 20-40 years <br />Furniture, Fixtures, and Equipment 5-10 years <br />Vehicles 5 years <br />Works of Art 50 years <br />Public Domain Infrastructure 25-45 years <br />System Infrastructure 25-30 years <br />6. Capital Leases <br />Assets held under capital leases are recorded at the lower of the net present value of the minimum lease <br />payments or the fair value of the leased asset at the inception of the lease. Amortization expense is computed <br />using the straight-line method over the useful lives of the assets and is included in depreciation expense. <br />7. Deferred Outflows/Inflows of Resources <br />In addition to assets, the statement of net position will sometimes report a separate section for deferred <br />outflows of resources. This separate financial statement element, deferred outflows of resources, represents <br />a consumption of net position that applies to a future period(s) and so will not be recognized as an outflow <br />of resources (expense/expenditure) until then. The City reports a deferred outflow of resources related to <br />pensions and OPEB. See footnote IV. F. for further information. The City also reports a deferred outflow <br />of resources related to an asset retirement obligation. See footnote IV. O. for further information. <br />In addition to liabilities, the statement of net position will sometimes report a separate section for deferred <br />inflows of resources. This separate financial statement element, deferred inflows of resources, represents an <br />acquisition of net position that applies to a future period(s) and so will not be recognized as an inflow of <br />resources (revenue) until that time. The government has a deferred inflow of resources related to pensions <br />and OPEB. See IVY. for further information. In addition, the government has one type of item, which <br />arises only under a modified accrual basis of accounting, that qualifies for reporting in this category. <br />Accordingly, the item, unavailable revenue, is reported only in the governmental funds balance sheet. The <br />governmental funds report unavailable revenues from the following sources: property taxes, EMS, <br />municipal court, and street assessments. These amounts are deferred and recognized as an inflow of <br />resources in the period that the amount becomes available. <br />32 <br />