Paris Economic Development Corp. FY 2010-11 (2)

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Paris Economic Development Corporation (A Component Unit of the City of Paris, Texas) Notes to Financial Statements September 30, 2011 Note 1: Organization The Paris Economic Development Corporation (PEDC) is a governmental non-profit corporation established July 19, 1993, funded by a quarter percent sales tax. PEDC was organized exclusively for the purpose of benefiting and accomplishing public purposes of the City of Paris, Texas, by promoting, assisting, and enhancing economic development activities as provided by the Development Corporation Act of 1979. PEDC is a component unit of the City of Paris, Texas, and the business and affairs are managed by a five-member board of directors appointed by the governing body of the City of Paris, Texas. Note 2: Summary of Significant Accounting Policies A. Measurement Focus, Basis of Accounting, and Basis of Presentation The accounting policies of PEDC conform to accounting principles generally accepted in the United States of America as applicable to governments. The following is a summary of the more significant accounting policies: Financial Statements - Combined Governmental Funds and Government-Wide Statements PEDC's financial statements include both government-wide (reporting the unit as a whole) and fund financial statements (reporting PEDC's major funds). In the Statement of Net Assets, the governmental activities column is reported on a full accrual, economic resource basis, which recognizes all long-term assets and receivables as well as long- term debt and obligations, if any. Net assets are reported in various categories based on current financial reporting pronouncements. The major difference from prior year reporting is the category for industrial incentives. The reporting policy regarding committed classification is that when a contractual obligation is created, the amount of the incentive is considered committed. When payments are made, they are considered to have been paid from the fund balance classification in which they were accumulated. The Statement of Activities reports both the gross and net cost of PEDC's function (economic development). Economic development is supported by general government revenues (sales tax, interest on investments, etc.). The financial transactions of PEDC are reported in two individual funds in the combined financial statements. These funds are accounted for by providing a separate set of self-balancing accounts that comprise their assets, liabilities, fund equity, revenues, and expenditures/expenses. The focus of the governmental funds' measurement (in the fund statements column) is upon determination of financial position and changes in financial position (sources, uses, and balances of financial resources) rather than upon net income. PEDC considers all revenues available if they are collected within 60 days after year end and expenditures are recognized when the related liability is incurred. The following is a description of the governmental funds of PEDC: General Fund - The General Fund is the general operating fund and is used to account for all financial resources except those required to be accounted for in another fund. Debt Service Fund - The Debt Service Fund is used to account for the accumulation of resources for, and the payment of, general long-term debt.