C.A.F.R., FY 2006-07 - Laserfiche WebLink

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City of Paris, Texas Notes to Financial Statements September 30, 2007 I. Summary of Significant Accounting Policies (Continued) D. Assets, Liabilities and Equity (Continued) 5. Capital Assets (Continued) estimated historical cost if purchased or constructed. Donated capital assets are recorded at estimated fair market value at the date of donation. Infrastructure acquired prior to the implementation of GASB 34 are included in the financial statements. The cost of normal maintenance and repairs that do not add to the value of the asset or materially extend assets lives are not capitalized. Major outlays for capital assets and improvements are capitalized as projects are constructed. Interest incurred during the construction phase of capital assets of business-type activities is included as part of the capitalized value of the assets constructed. The total interest expense incurred by business-type activities during the current fiscal year was $1,195,694. Of this amount, none was included as part of the cost of capital assets under construction in connection with water line and sewer line construction projects. Property, plant, and equipment of the primary government, as well as the component unit, is depreciated using the straight line method over the following estimated useful lives: Buildings and Improvements 20-40 years Furniture, Fixtures and Equipment 5-10 years Vehicles 5 years Public Domain Infrastructure 25-45 years System Infrastructure 25-30 years 6. Compensated Absences Vacation and sick leave benefits are accumulated by City employees in accordance with guidelines suggested in the City's personnel policies. 7. Long-Term Obligations In the government-wide financial statements and proprietary fund types in the fund financial statements, long-term debt and other long-term obligations are reported as liabilities in the applicable governmental activities, business-type activities, or proprietary fund type statement of net assets. Bond premiums and discounts, as well as issuance costs, are deferred and amortized over the life of the bonds using the effective interest method. Bonds payable are reported net of the applicable bond premium or discount. Bond issuance costs are reported as deferred charges and amortized over the term of the related debt. 30