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<br />Note 1: <br /> <br />Note 2: <br /> <br />ftl) U;~~:~ ~ ::~ .~!~.. <br />~. . ..,."..." ~""'" .' '., ".". 1'4 <br />Ii i ~~S:a~rhl <br /> <br />?ie. iJ.oft <br /> <br />THE BIJOU IRRIGATION COMPANY <br />NOTES TO FINANCIAL STATEMENTS <br /> <br />SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) <br /> <br />L Net Assets (continued) <br /> <br />When an expense is incurred for purposes for which there are both restricted and unrestricted net <br />assets available, it is the Company's policy to apply those expenses to restricted net assets to the <br />extent such are available and then to unrestricted net assets. <br /> <br />J. Use of Estimates <br /> <br />The preparation of financial statements in accordance with generally accepted accounting <br />principles requires management to make estimates that affect amounts reported in the financial <br />statements during the reporting period. Actual results could differ from such estimates. <br /> <br />K. Fund Balance <br /> <br />In the fund financial statements, governmental funds report reservations of fund balance for <br />amounts that are not available for appropriation or are legally restricted by outside parties for use <br />for a specific purpose. For reserved fund balance see Note 8. Designations of fund balance <br />represent management plans that are subject to change. <br /> <br />CASH <br /> <br />Cash includes amounts in checking, savings and certificates of deposit. The Colorado Public <br />Deposit Protection Act (PDPA) requires that all units of local government deposit cash in eligible <br />publiC depositories, with eligibility determined by the state regulators. <br /> <br />Amounts on deposit in excess of federal insurance levels must be collateralized. The eligible <br />collateral is determined by the PDPA. PDPA allows the institution to create a single collateral pool <br />for all public funds. The pool is to be maintained by another institution or held in trust for all the <br />uninsured public deposits as a group. The market value of the collateral must be at least equal to <br />102% of the aggregate uninsured deposits. <br /> <br />Custodial credit risk is the risk that, in the event of a bank failure, the Company's deposits might <br />not be recovered. All the Company's deposits are covered by the PDPA; therefore, the Company <br />does not have credit risk. The Company has not formally adopted policies regarding interest rate <br />risk and credit risk. Interest rate risk is the risk that changes in interest rates will adversely affect <br />the fair value of an investment. Credit risk is defined as the risk an issuer or other counterparts to <br />an investment in debt securities will not fulfill its obligations. All of the Company's certificates of <br />deposit are due within one year. <br /> <br />Cash deposits of the Governmental activities totaled $90,391 at fiscal year end. The total deposit <br />amount is included under the Federal insurance coverage. <br /> <br />-10- <br />