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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 />70 <br />Note 1 – Summary of Significant Accounting Policies (Continued) <br /> <br />K. Capital Assets <br /> <br />Capital assets, which include property, plant, equipment, infrastructure assets, right-to-use lease equipment and <br />buildings and subscription assets, are reported in the applicable governmental or business-type activities columns <br />in the government-wide financial statements. Such assets are recorded at historical cost (except for intangible right‐ <br />to‐use lease assets) or estimated historical cost if purchased or constructed. Donated capital assets are valued at <br />their estimated acquisition value on the date donated. City policy has set the capitalization threshold at $5,000 for <br />machinery and equipment, $100,000 for buildings, improvements, and infrastructure, and with useful lives <br />exceeding two years. Depreciation is recorded on a straight-line basis over estimated useful lives of the assets as <br />follows: <br /> <br />Asset Type Years <br />Buildings 20-50 <br />Improvements 33-60 <br />Storm Drains 40 <br />Bridges 30 <br />Parks 25 <br />Streets and Traffic Signals 20 <br />Equipment 2-15 <br />Lease and subscription assets Contract term <br />For all infrastructure systems, the City elected to use the basic approach for infrastructure reporting. The City <br />defines infrastructure as the basic physical assets that allow the City to function. The assets include streets, sewer, <br />and park lands. Each major infrastructure system can be divided into subsystems. For example, the street system <br />can be subdivided into pavement, curb and gutters, sidewalks, medians, streetlights, landscaping and land. These <br />subsystems were not delineated in the basic financial statements. The appropriate operating department maintains <br />information regarding the subsystems. <br /> <br />In the fund financial statements, capital assets used in governmental fund operations are accounted for as capital <br />outlay expenditures of the governmental fund upon acquisition. Capital assets used in proprietary fund operations <br />are accounted for the same as in the government-wide statements. <br /> <br />L. Long-Term Debt <br /> <br />Government-Wide Financial Statements and Proprietary Fund Financial Statements <br /> <br />Long-term debt and other financial obligations are reported as liabilities in the appropriate funds. Bond premiums <br />and discounts are deferred and amortized over the life of the bonds using straight line method. Bonds payable are <br />reported net of the applicable premium or discount. Issuance costs are expensed when incurred. Gains or losses on <br />bond refunding are reported as either deferred outflows of resources or deferred inflows of resources and amortized <br />over the term of the related debt. <br /> <br />Governmental Fund Financial Statements <br /> <br />The governmental fund financial statements do not present long-term debt but are shown in the Reconciliation of <br />the Governmental Funds Balance Sheet to the Government-Wide Statement of Net Position. Governmental fund <br />types recognize bond premiums and discounts during the current period. The face amount of debt issued is reported <br />as other financing sources. Premiums received on debt issuances are reported as other financing sources while <br />discounts on debt issuances are reported as other financing uses. Debt issuance costs, whether or not withheld from <br />the actual debt proceeds received, are reported as debt service expenditures. <br />7.C. - Page 102 of 269 <br />121