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City of Redwood City <br />Notes to the Basic Financial Statements (Continued) <br />For the Year Ended June 30, 2025 <br /> <br /> <br />67 <br />Note 1 – Summary of Significant Accounting Policies (Continued) <br /> <br />D. Cash, Cash Equivalents and Investments (Continued) <br /> <br />Levels of inputs are as follows: <br /> <br />Level 1 – Inputs are unadjusted, quoted prices for identical assets or liabilities in active markets at the <br />measurement date. <br /> <br />Level 2 – Inputs, other than quoted prices included in Level 1, which are observable for the assets or liabilities <br />through corroboration with market data at the measurement date. <br /> <br />Level 3 – Unobservable inputs that reflect management’s best estimate of what market participants would use <br />in pricing the assets or liabilities at the measurement date. <br /> <br />E. Cash and Investments with Fiscal Agents <br /> <br />Amounts reported as cash and investments with fiscal agents have been restricted by bond indentures or are to be <br />used for specified purposes based on contract provisions, such as bonded debt service. <br /> <br />F. Receivables <br /> <br />Customer or trade receivables are reported as “accounts receivable” and are shown net of an allowance for <br />uncollectible accounts based on historical and management estimates. <br /> <br />Noncurrent portions of long-term receivables (e.g., “notes receivable”) due to governmental fund types are reported <br />in their respective balance sheets despite their spending measurement focus. Recognition of governmental fund <br />type revenues represented by noncurrent receivables are deferred until they become current receivables. Noncurrent <br />portions of long-term notes receivable are offset by restricted fund balance in the special revenue funds. <br /> <br />G. Interfund Transactions <br /> <br />Activity between funds that are representative of lending/borrowing arrangements outstanding at the end of the <br />fiscal year are referred to as either “due to/from other funds” or “advances to/from other funds” (i.e., the current <br />portion of interfund loans). Any residual balances outstanding between the governmental activities and business- <br />type activities are reported in the Governmental-Wide Financial Statements as “internal balances.” <br /> <br />H. Inventories and Prepaid Items <br /> <br />Inventories are stated at moving average cost. The cost is recorded as expenditure at the time an individual inventory <br />item is consumed. As inventories must be maintained at a certain level, an amount for inventories is recorded as <br />non-spendable in the general fund balances. Consequently, these non-spendable fund balance amounts are not <br />available for appropriation. <br /> <br />General fund inventories consist of stationery. Equipment services fund inventory consists of tires, batteries, testing <br />equipment, automotive parts, and small tools. <br /> <br />Under the consumption method, certain payments to vendors reflect costs applicable to future accounting periods <br />and are recorded as prepaid items in both government-wide and fund financial statements. The cost of prepaid items <br />is recorded as expenditures/expenses when consumed rather than when purchased. <br />7.C. - Page 99 of 269 <br />118