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7.1.A. - Page 68 , <br /> Notes to the Basic Financial Statements <br /> For the year ended June 30, 2014 <br /> NOTE 1- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) <br /> G. Inventories and Prepaid Items <br /> Inventories are stated at moving average cost. The cost is recorded as an expenditure at the time an <br /> individual inventory item is consumed. As inventories must be maintained at a certain level, an amount <br /> for inventories is recorded as nonspendable in the general fund balances. Consequently, these <br /> nonspendable fund balance amounts are not available for appropriation. <br /> General fund inventories consist of stationery. Equipment services fund inventory consists of tires, <br /> batteries, testing equipment, automotive parts, and small tools. <br /> Certain payments to vendors reflect costs applicable to future accounting periods and are recorded as <br /> prepaid items in both government -wide and fund financial statements. <br /> H. Property Taxes <br /> Property taxes attach as an enforceable lien on property as of January 1, and are collected for a 12 <br /> month period effective July 1 by the San Mateo County tax collector. Taxes are billed once a year in late <br /> October and are payable in two equal installments due by December 10 and April 10 of the following <br /> year. The taxes not paid by those dates are subject to a penalty of 10 %. <br /> In September of 1993, the County of San Mateo Board of Supervisors adopted the "Teeter Plan" for <br /> secured property taxes. Under the Teeter Plan, the state law allows the county to advance to the cities <br /> all property taxes billed, regardless of whether the taxes have been paid. The county then is entitled to <br /> keep all penalties and interest accruing on delinquent taxes. Property taxes on unsecured taxable <br /> property are not affected by this change. <br /> Under Proposition 13, adopted by the voters in a statewide ballot in 1978, assessed value is increased <br /> by the cost of living index, not to exceed 2% as of January 1 each year except for those properties that <br /> have changed ownership during the 12 month period since the lien date. City property tax revenues are <br /> recognized when levied to the extent that they result in current receivables. <br /> 1. Unbilled Service Receivables <br /> In the water and sewer utilities, residential customers are billed bi- monthly and all commercial and <br /> industrial customers monthly. Revenue is recorded as billed to customers on a cyclical basis. No <br /> accrual is made for unbilled services. There were no unbilled services in Port, parking, Docktown <br /> Marina, or internal service funds as of June 30, 2014. <br /> There is no accrual for unbilled water services as of June 30, 2014; revenues cannot be recognized since <br /> water meters are not read at such date. Management believes that the revenue from unbilled services <br /> does not have a material effect on total revenue. <br /> J. Capital Assets <br /> All capital assets are valued at historical cost or estimated historical cost if actual historical cost is not <br /> available. Contributed capital assets are valued at their estimated fair value on the date contributed. <br /> 40 <br />