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<br />CITY OF REDWOOD CITY, CALIFORNIA <br />RECONCILIA TION OF THE <br />NET CHANGE IN FUND BALANCES - TOTAL GOVERNMENTAL FUNDS <br />WITH THE STATEMENT OF ACTIVITIES <br />FOR THE YEAR ENDED JUNE 30, 2004 <br /> <br />The schedule below reconciles the Net Changes in Fund Balances reported on the Governmental Funds Statement of Revenues, Expenditures and Changes in <br />Fund Balance, which measures only changes in current assets and current liabilities on the modified accrual basis, with the Change in Net Assets of <br />Governmental Activities reported in the Statement of Activities, which is prepared on the full accrual basis. <br /> <br />$ <br /> <br />NET CHANGE IN FUND BALANCES-TOTAL GOVERNMENTAL FUNDS <br /> <br />29,370,399 <br /> <br />Amounts reported for governmental activities in the Statement of Activities are different because of the following: <br /> <br />CAPITAL ASSETS TRANSACTIONS <br /> <br />Governmental Funds report capital outlays as expenditures. However, in the Statement of Activities the cost of those assets <br />is capitalized and allocated over their estimated useful lives and reported as depreciation expense. <br /> <br />The capital outlay expenditures are therefore added back to fund balance. <br />Depreciation expense is deducted from the fund balance. <br />(Depreciation expense is net of internal service fund depreciation of <br />$737,223 which has already been allocated to serviced funds.) <br />Retirements of capital assets <br /> <br />19,541,360 <br /> <br />(4,986,718) <br />( 5,399) <br /> <br />LONG TERM DEBT PROCEEDS AND PAYMENTS <br /> <br />Bond proceeds provide current financial resources to governmental funds, but issuing debt increases long-term liabilities in the <br />Statement of Net Assets. Repayment of bond principal is an expenditure in the governmental funds, but in the <br />Statement of Net Assets the repayment reduces long-term liabilities. <br /> <br />Repayment of debt principal is added back to fund balance. <br />Payments to the bond refunding agent <br />Refunding bonds issued, including a premium of $4,573 <br />Tax allocation bonds issued, including a premium of $923, 140 <br />Deferral of costs of issuance <br /> <br />4,497,321 <br />6,725,000 <br />(11,479,573) <br />(34,920,588) <br />1,756,732 <br /> <br />ACCRUAL OF NON-CURRENT ITEMS <br /> <br />The amounts below included in the Statement of Activities do not provide or (require) the use of current financial resources and <br />therefore are not reported as revenue or expenditures in governmental funds (net change): <br /> <br />Non-current portion of compensated absences <br />Interest payable and interest accreted on capital appreciation debt <br />Deferred loan revenue <br />Amortization of bond premium <br />Amortization of issuance costs <br />Other <br /> <br />(559,836) <br />(1,121,927) <br />38,552 <br />31,057 <br />(67,976) <br />(2,010) <br /> <br />ALLOCATION OF INTERNAL SERVICE FUND ACTIVITY <br /> <br />Internal Service Funds are used by management to charge the costs of certain activities, such as equipment acquisition, maintenance, <br />and insurance to individual funds. The portion of the net revenue (expense) of these Internal Service Funds arising out <br />of their transactions with governmental funds is reported with governmental activities, because they service those activities. <br /> <br />Change in Net Assets - All Internal Service Funds <br /> <br />(1,143,530) <br /> <br />CHANGE IN NET ASSETS OF GOVERNMENTAL ACTIVITIES <br /> <br />7,672,864 <br /> <br />See accompanying notes to financial statements <br /> <br />21 <br />