05 Audit for FY01-02 - Laserfiche WebLink

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City of Paris, Texas Notes to Financial Statements (Continued) September 30, 2002 I. Summary of Significant Accountin~ Policies (Continued) C. Assets, Liabilities and Equity (Continued) 4. Restricted Assets (Continued) -- 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. Fixed Assets -- Fixed assets used in governmental fund type operations (general fixed assets) are accounted for in the General Fixed Assets Account Group, rather than in governmental funds. Public domain general fixed assets consisting of certain improvements including roads, bridges, curbs and gutters, streets and sidewalks, drainage systems, and lighting systems are not capitalized as general fixed assets. No depreciation is provided on general fixed assets. All fixed assets are valued at historical cost or estimated histori- cal cost if actual historical cost is not available. Donated fixed -- assets are valued at their estimated fair value on the date donated. The cost of normal maintenance and repairs that do not add to the value of the asset or materially extend assets' lives are not included in the general fixed assets account group or capitalized in the proprietary funds. -- Depreciation of all exhaustible fixed assets used by proprietary funds is charged as an expense against their operations. Accu- mulated depreciation is reported on the proprietary fund balance -- sheet. Depreciation has been provided over the estimated useful lives using the straight-line method. The estimated useful lives are as follows: Utility Plant in Service 10-100 years Furniture, Fixtures and Equipment 5-50 years Vehicles 5 years For proprietary fund fixed assets, interest is capitalized on construction costs incurred during the year at an average interest _ rate on borrowed funds (water and sewer revenue bonds) in accordance with accounting principles generally accepted in the United States of America. During the year ended September 30, 2002, total interest costs incurred were $1,826,635 and $438,114 interest cost was capitalized. -- 19