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 (Continued) y F 'h C' l ;v: fie September 30, 2011 F Note 2: Summary of Significant Accounting Policies (Continued) B. Assets, Liabilities, and Net Assets 1) Deposits and Investments Cash and cash equivalents are considered to be cash on hand, demand deposits, and short- term investments with original maturities of three months or less from the date of acquisition. Statutes authorize PEDC to invest in obligations of the U.S. Treasury, direct obligations of the State of Texas, other obligations guaranteed or insured by the State of Texas or the United States, obligations of states and political subdivisions of any state meeting certain rating requirements, certificates of deposit, and fully collateralized direct repurchase agreements having a defined termination date. Investments are stated at market value. 2) Restricted Assets and Fund Balance Reserves Certain resources set aside for repayment of revenue bonds and related interest are classified as restricted assets on the balance sheet because their use is limited by applicable bond covenants. The Debt Service Fund is used to accumulate resources for debt service payments over the next twelve months. Governmental funds report reservations of fund balances for amounts that are not considered a current financial resource. The Reserve Fund is accumulated for the purpose of retiring the last of any bonds as they become due or for debt service when the Debt Service Funds are insufficient. 3) Land Development Cost - Industrial Park PEDC has acquired land and added improvements to develop an industrial park which is to be divided and sold to businesses wanting to locate their facilities in such an area. Land and added improvements are not depreciated because they are expected to be sold and are not used in PEDC's ongoing activities. 4) Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America, requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. 5) Excess of Expenditures Over Appropriations For the year ended September 30, 2011, expenditures exceeded budgeted amounts in the General Fund in Communications - Telephone ($594), Contractual Associations ($2,079), Promotional Advertising ($2,798), and Transfers ($67,407).