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<br />Note 1: <br /> <br />~, .1" g:~? <br />~n.-.'fc. "~. ,.y.....'.. '.".'.' <br />1';# ~,t.,,,,..... " <br />,j' .~ ~",jJ~ !",~ ~;'; ~q: <br />w""~;~ <br /> <br />aft <br /> <br />THE BIJOU IRRIGATION COMPANY <br /> <br />NOTES TO FINANCIAL STATEMENTS <br /> <br />SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) <br /> <br />F. Encumbrances <br /> <br />The Company does not use encumbrance accounting. <br /> <br />G. Capital Assets <br /> <br />Capital assets, which include land and machinery and equipment (furniture, vehicles, computers, <br />etc.), are reported in Governmental Activities column of the Government-Wide Financial <br />Statements. Capital assets are defined by the Company as assets with an initial, individual cost <br />of more than $5,000. Such assets are recorded at historical cost or estimated historical cost if <br />purchased or constructed. Donated or annexed capital assets are recorded at estimated market <br />value at the date of donation or annexation. <br /> <br />The costs of normal maintenance and repairs that do not add to the value of the asset or <br />materially extend assets lives are not capitalized. Major outlays for capital assets and <br />improvements are capitalized as projects are constructed. <br /> <br />Depreciation on exhaustible assets is recorded as an allocated expense in the Statement of <br />Activities with accumulated depreciation reflected in the Statements of Net Assets. Depreciation <br />on the remaining capital assets is provided on the straight-line basis over the following estimated <br />useful lives: <br /> <br />Buildings <br />Bijou Canal and Reservoir <br />Equipment <br /> <br />20-75 years <br />15-75 years <br />6-20 years <br /> <br />H. Long-Term Debt and Costs <br /> <br />Long-term debt is reported at face value, net of applicable discounts and deferred loss on <br />refunding. Costs related to the issuance of debt are deferred and amortized over the lives of the <br />various debt issues. Losses occurring from advance refundings of debt are deferred and <br />amortized as interest expense over the remaining life of the old bonds, or the life of the new <br />bonds, whichever is shorter. <br /> <br />I. Net Assets <br /> <br />Net assets are classified in the following three components: <br /> <br />Invested in capital assets, net of related debt - This component of net assets consists of capital <br />assets, net of accumulated depreciation and reduced by the outstanding balances of any bonds, <br />mortgages, notes or other borrowings that are attributable to the acquisition, construction or <br />improvement of those assets. If there are significant unspent related debt proceeds at year-end, <br />the portion of the debt attributable to the unspent proceeds is not included in the calculation of <br />invested in capital assets, net of related debt. Rather, that portion of the debt is included in the <br />same net assets component as the unspent proceeds. <br /> <br />Restricted - This component of net assets consists of constraints imposed by creditors (such as <br />through debt covenants), grantors, contributors, or laws or regulations of other governments or <br />constraints imposed by law through constitutional provisions or enabling legislation. <br /> <br />Unrestricted net assets - This component of net assets consists of net assets that do not meet <br />the definition of "restricted" or "invested in capital assets, net of related debt." <br /> <br />-9- <br />