C.A.F.R., FY 2005-06 - Laserfiche WebLink

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City of Paris, Texas Notes to Financial Statements September 30, 2006 I. Summary of Significant Accounting Policies (Continued) D. Assets, Liabilities and Equity (Continued) 2. Receivables and Payables Transactions between funds that would be treated as revenues, expenditures, or expenses if the involved organizations were external to the governmental unit (quasi-external transactions) are accounted for as revenues, expenditures, or expenses in the funds involved. Transactions which constitute reimbursements to a fund for expenditures or expenses initially made from that fund which were properly applicable to another fund are recorded as expenditures or expenses in the reimbursing fund and as reductions of the expenditure or expense in the fund that is reimbursed. The City's ad valorem taxes are levied on October 1 and are due no later than January 31 of the following year. Taxes become delinquent February 1, after which time penalties and interest and, if not paid by July, attorney's collection fees are added. A tax lien attaches to property (real and personal) on January 1 of each year to secure the payment of all taxes, penalties, and interest ultimately imposed on the property. The lien is effective until all such amounts are paid. 3. Inventories Inventories are valued at cost using the fIrst-in, fIrst-out method. Inventories of governmental funds are recorded as expenditures when consumed rather than when purchased. 4. Restricted Assets Certain proceeds of the City's enterprise fund revenue bonds, as well as certain resources set aside for their repayment, are classified as restricted assets because their use is limited by applicable bond covenants. The Water Revenue Construction Fund is used to report those proceeds of revenue bond issuances that are restricted for use in construction. The Revenue Bond Sinking Funds are used to segregate resources accumulated for debt service payments over the next twelve months. The Revenue Bond Reserve and Contingency Accounts are used to report resources set aside to make up potential future deficiencies in the Revenue Bond Sinking Funds and to meet unexpected contingencies or to fund asset renewals and replacements, The Pat Mayse Reserve Fund is being accumulated to assist in funding future water storage rights. 5. Capital Assets Capital assets, which include property, plant, equipment, and infrastructure assets (e.g., roads, bridges, sidewalks, and similar items) are reported in the applicable governmental or business- type activities columns in the government-wide financial statements. Capital assets are defined by the government as assets with an initial, individual cost of more than $5,000 and an estimated useful life in excess of two years. Such assets are recorded at historical cost or 30