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SOUTHEASTERN COLORADO WATER CONSERVANCY DISTRICT <br />NOTES TO FINANCIAL STATEMENTS <br />DECEMBER 31, 2005 <br />NOTE 1 -SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont'd.) <br />L. LONG-TERM LIABILITIES <br />In the government-wide financial statements and the fund financial statements for the enterprise fund, the <br />safety of dams contract obligation to the Bureau of Reclamation is reported as a liability in the applicable <br />statement of net assets. No imputed interest is considered in relation to this obligation. <br />With respect to the District's original contract with the Bureau of Reclamation that is reported only in the <br />government-wide financial statements, the Bureau of Reclamation computes an annual interest cost that is <br />charged to the District, thereby increasing the District's obligation. <br />M. FUND EQUITY <br />In the fund financial statement, the governmental fund reports reservations of fund balance for amounts that <br />are not available for appropriation or are legally restricted by outside parties for a specific purpose. <br />Designations of fund balance represent tentative plans for future use of financial resources that are subject to <br />change. <br />Net assets represent the difference between assets and liabilities. Net assets invested in capital assets, net of <br />related debt consist of capital assets reduced by accumulated depreciation and the outstanding balance of the <br />original contract obligation to the Bureau of Reclamation. Restricted net assets are reported when there are <br />liabilities imposed on their use through external restrictions imposed by creditors, grantors, voters or laws or <br />regulations of other governments. <br />N. INTERFUND TRANSACTIONS <br />Interfund transactions are accounted for as revenues, expenditures or expenses. Transactions that constitute <br />reimbursements to a fund for expenditures/expenses initially made from it that are properly applicable to <br />another fund are recorded as expenditures/expenses in the reimbursing fund and as a reduction of <br />expenditures/expenses in the fund that is reimbursed. All other Interfund transactions are reported as Interfund <br />transfers. <br />O. ESTIMATES <br />The preparation of financial statements in conformity with accounting principles generally accepted in the <br />United States of America requires management to make estimates and assumptions that affect certain reported <br />amounts and disclosures. Accordingly, actual results could differ from those estimates. <br />-22- <br />