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6.G. - PaRedwoocT$i7 <br />City <br />Notes to the Basic Financial Statements <br />For the fiscal year ended June 30, 2018 <br />NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) <br />J. Capital Assets, Continued <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 <br />20-50 <br />Years <br />Improvements <br />33-60 <br />Years <br />Equipment <br />2-15 <br />Years <br />Storm Drains 40 Years Traffic Signals 20 Years <br />Bridges 30 Years Streets 20 Years <br />Parks 25 Years <br />K. Deferred Outflows/Inflows of Resources <br />In addition to assets, the statement of net position (balance sheet) will sometimes report a separate <br />section for deferred outflows of resources. This separate financial statement element, deferred outflows <br />of resources, represents a consumption of net position that applies to a future period(s) and so will not <br />be recognized as an outflow of resources (expense/expenditure) until then. <br />In addition to liabilities, the statement of net position (balance sheet) will sometimes report a separate <br />section for deferred inflows of resources. This separate financial statement element, deferred inflows of <br />resources, represents an acquisition of net position that applies to a future period(s) and so will not be <br />recognized as an inflow of resources (revenue) until that time. <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 />interfund loans) as appropriate and are subject to elimination upon consolidation. Any residual balances <br />outstanding between the governmental activities and the business -type activities are reported in the <br />government -wide financial statements as "internal balances." <br />Services provided or used, deemed to be at market or near market rates, are treated as revenues and <br />expenditures or expenses. <br />Reimbursements occur when the funds responsible for particular expenditures or expenses repay the <br />funds that initially paid for them. Such reimbursements are reflected as expenditures or expenses in the <br />reimbursing fund and reductions to expenditures or expenses in the reimbursed fund. <br />All other interfund transactions are treated as transfers. Transfers between governmental or proprietary <br />funds are netted as part of the reconciliation to the government -wide presentation. <br />44 250 <br />