Laserfiche WebLink
City of Redwood City <br />Notes to the Basic Financial Statements (Continued) <br />For the Year Ended June 30, 2025 <br /> <br /> <br />66 <br />Note 1 – Summary of Significant Accounting Policies (Continued) <br /> <br />C. Deferred Outflows and Inflows of Resources (Continued) <br /> <br />Deferred Outflows of Resources represent a consumption of net assets that applies to a future period(s) and <br />so will not be recognized as an outflow of resources (expense/ expenditure) until then. <br /> <br />Deferred Inflows of Resources represent an acquisition of net assets that applies to a future period(s) and so <br />will not be recognized as an inflow of resources (revenue) until that time. <br /> <br />D. Cash, Cash Equivalents and Investments <br /> <br />The City's dependence on property tax receipts, which are received semi-annually, requires it to maintain significant <br />cash reserves to finance operations during the remainder of the year. The City pools cash from all sources and all <br />funds except Cash and Investments with Fiscal Agents so that it can be invested at the maximum yield, consistent <br />with safety and liquidity, while individual funds can make expenditures at any time. It is the City's intent to hold <br />investments to maturity. <br /> <br />Investments are reported in the accompanying financial statements at fair value, except for certain investment <br />contracts that are reported at cost because they are not transferable and they have terms that are not affected by <br />changes in market interest rates. Changes in fair value that occur during a fiscal year are recognized as investment <br />income reported for that fiscal year, and may result in negative investment income in the accompanying financial <br />statements. Investment income includes interest earnings, changes in fair value, and any gains or losses realized <br />upon the liquidation, maturity, or sale of investments. <br /> <br />Investment income earned by the pooled investments is allocated to the various funds based on each fund's average <br />cash and investment balance, except for investment income associated with funds not legally required to receive <br />pooled investment income which has been assigned to and recorded as revenue of the general fund, as provided by <br />California Government Code Section 53647. <br /> <br />For purposes of the statement of cash flows, amounts reported as cash and cash equivalents, include amounts on <br />deposit in the City pool and any short-term, highly liquid investments that are both readily convertible to known <br />amounts of cash or so near their maturity that they present insignificant risk of changes in value because of changes <br />in interest rates. <br /> <br />Certain disclosure requirements, if applicable, for deposits and investment risks in the following areas: <br /> <br /> Interest rate risk <br /> Credit risk <br />- Overall <br />- Custodial credit risk <br />- Concentration of credit risk <br /> Foreign currency risk <br /> <br />In addition, other disclosures are specified including use of certain methods to present deposits and investments, <br />highly sensitive investments, credit quality at year-end and other disclosures. <br /> <br />U.S. GAAP establishes a framework for measuring fair value, and establishes disclosures about fair value <br />measurement. Investments, unless otherwise specified, recorded at fair value in the financial statements, are <br />categorized based upon the level of judgment associated with the inputs used to measure their fair value. <br /> <br />7.C. - Page 98 of 269 <br />117