HomeMy WebLinkAboutNC Comprehensive Report (Finance) (36)CITY OF NATIONAL CITY
Notes to the Basic Financial Statements
(Continued)
(1) Summary of Significant Accounting Policies, (Continued)
The City participates in an investment pool managed by the State of California,
entitled Local Agency Investment Fund (LAIF), which has invested a portion of
the pool funds in Structured Notes and Asset -Backed Securities. LAIF's
investments are subject to credit risk with the full faith and credit of the State of
California collateralizing these investments. In addition, these Structured Notes
and Asset -Backed Securities are subject to market risk as to change in interest
rates.
E. Restricted Cash and Investments
Certain restricted cash and investments are held by fiscal agents for the
redemption of bonded debt and for acquisition and construction of capital
projects.
F. Interfund Transactions
Activity between funds that are representative of lending/borrowing arrangements
outstanding at the end of the fiscal year are referred to as either "due to/from other
funds" (i.e., the current portion of interfund loans) or "advances to/from other
funds" (i.e., the noncurrent portion of interfund loans). Any residual balances
outstanding between the governmental activities and business -type activities are
reported in the Governmental -Wide Financial Statements as "internal balances."
Advances between funds, reported in the fund financial statements, are offset by a
fund balance reserve account in applicable governmental funds to indicate that
they are not available for appropriation and are not expendable available financial
resources.
G. Inventories and Prepaid Items
Inventories are stated at cost using the average cost method. Payments made to
vendors for services that will benefit periods beyond June 30, 2012 are recorded
as prepaid items. The City uses the consumption method when reporting prepaid
items. Prepaid items are recorded as an asset and are offset by a reserve in the
fund financial statements.
H. Land Held for Resale
Land held for resale is recorded at the lower of cost or, upon entering into a
contract for sale, the estimated net realizable value. Fund balances are reserved in
amounts equal to the carrying value of land and buildings held for resale, because
such assets are not available to finance the City's current operations.
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