HomeMy WebLinkAboutNC Comprehensive Report (Finance) (38)CITY OF NATIONAL CITY
Notes to the Basic Financial Statements
(Continued)
Summary of Significant Accounting Policies, (Continued)
unrecovered cost method was computed using industry accepted life expectancies
for each infrastructure system. The book value was then computed by deducting
the accumulated depreciation from the estimated historical cost.
J. Interest Payable
In the government -wide financial statements, interest payable on long-term debt is
recognized as the liability is incurred for governmental fund types and proprietary
fund types.
In the fund financial statements, proprietary fund types recognize the interest
payable when the liability is incurred.
K. Compensated Absences
In the governmental fund financial statements, compensated absences are
recorded as expenditures in the year paid, as it is the City's policy to liquidate any
unpaid vacation or sick leave at year-end from future resources rather than
currently available and expendable resources. Accordingly, the entire unpaid
liability for employee compensated absences related to governmental fund types
is recorded in the government -wide financial statements and is typically
liquidated by the General Fund.
For proprietary funds, the estimated value of the total accrued vacation and vested
sick leave is recorded as current liability in the fund financial statements and
government -wide financial statements and is typically liquidated by the respective
enterprise and internal service funds.
L. Long -Term Debt
In the government -wide financial statements, long-term debt and other long-term
obligations are reported as liabilities in the applicable governmental activities.
Bond premiums and discounts, as well as issuance costs, are deferred and
amortized over the life of the bonds using the effective interest method. Bonds
payable are reported net of the applicable bond premium or discount. Bond
issuance costs are reported as deferred charges and amortized over the term of the
related debt.
In the fund financial statements, governmental fund types recognize bond
premiums and discounts, as well as bond issuance costs, during the current period.
The face amount of debt issued is reported as other financial sources. Premiums
received on debt issuances are reported as other financing sources while discounts
on debt issuances are reported as other financing uses. Issuance costs, whether or
not withheld from the actual debt proceeds received, are reported as debt service
expenditures.
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