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City of Redwood City 7.1.A. - Page 69 <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 /> The City's policy is to capitalize all assets with costs exceeding certain minimum thresholds, $5,000 for <br /> machinery and equipment, $100,000 for buildings, improvements, and infrastructure, and with useful <br /> lives exceeding two years. <br /> With the implementation of GASB Statement No. 34, the City recorded all of its public domain <br /> (infrastructure) capital assets placed in service after June 30, 1980, which include roads, bridges, curbs <br /> and gutters, streets and sidewalks, drainage systems, and lighting systems using the basic approach. <br /> The purpose of depreciation is to spread the cost of capital assets equitably among all users over the life <br /> of these assets. The amount charged to depreciation expense each year represents that year's pro rata <br /> share of the cost of capital assets. GASB Statement No. 34 requires that all capital assets with limited <br /> useful lives be depreciated over their estimated useful lives. Depreciation is provided using the straight <br /> line method which means the cost of the asset is divided by its expected useful life in years and the <br /> result is charged to expense each year until the asset is fully depreciated. <br /> The City has assigned the useful lives listed as follows to capital assets: <br /> Buildings 20 -50 Years Storm Drains 40 Years Traffic Signals 20 Years <br /> Improvements 33 -60 Years Bridges 30 Years Streets 20 Years <br /> Equipment 2 -15 Years Parks 25 Years <br /> K. Deferred Outflows /Inflows of Resources <br /> In addition to assets, the statement of financial position will sometimes report a separate section for <br /> deferred outflows of resources. This separate financial statement element represents a consumption of <br /> net position that applies to a future period(s) and so will not be recognized as an outflow of resources <br /> (expense /expenditure) until then. The City has deferred outflows of resources related to the <br /> unamortized losses on refunding of debt. The losses on refunding result from the difference in the <br /> carrying value of refunded debt and its reacquisition price. This amount is deferred and amortized over <br /> the shorter of the life of the refunded or the refunding debt. <br /> In addition to liabilities, the statement of financial position will sometimes report a separate section for <br /> deferred inflows or resources. This separate financial statement element represents an acquisition of <br /> net position that applies to a future period(s) and so will not be recognized as an inflow of resources <br /> (revenues) until that time. The City has deferred inflows of resources related to unavailable revenues <br /> reported under the modified accrual basis of accounting in the governmental funds balance sheet. The <br /> governmental funds report unavailable revenues from property taxes, advances from the federal and <br /> state governments, and other sources as appropriate. These amounts are deferred and recognized as <br /> revenues in the period the amounts become available. <br /> L. Interfund Transactions <br /> Interfund transactions are reflected as loans, services provided or used, reimbursements, or transfers. <br /> Loans reported as receivables and payables are referred to as either "due to /from other funds" (the <br /> current portion of interfund loans) or "advances to /from other funds" (the noncurrent portion of <br /> 41 <br />