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SWAN'S NEST METRUPOLITAN DISTRICT <br />NOTES TO FINANCIAL STATEME�iTS <br />1. Sl:i�vIMARY OF SIGNIFICANT ACCOUNTIlVG POLICIES <br />The accounting policies of Swan's Nest Metrapolitan District of Summit County, Colorado (the <br />District) conform to generally accepted accounting principles as applicable to governments. The <br />following is a summary of the more significant policies consistently applied in the preparation of the <br />Distriet financial statements_ <br />Reporting Entity — The District was organized on April 15, 1986 and is governed by an elected <br />Board of Directors. As required by generally accepted accounting principles, these fmancial <br />statements present the activities of the District, which is legalty separate and financially independent of <br />other state and local governments. The District supplies water service for its geographical service <br />area. The District has no component units. <br />Basis of Accounting — The finaucial statements of the District are accounted for on a flow of <br />economic resources measurement facus. Under this method, revenue is reeorded when earned and <br />expenses are recarded at the time tiabilities are incurred. The District is accounted for as an entetprise <br />fund and has elected to implement the provisions of GASB Statement No_ 20 with regard to the <br />application of Financial Accounting Standards Board {FASB} Pronouncements to its proprietary <br />funds_ In accordance with tiie provisions of GASB Statement No. 20, the District has elected not to <br />apply those FASB Statements and Interpretations issued afterNovember 30, I989. An enterprise fund <br />is used to account for operations that aze financed and operated in a mann.er similar to a private <br />business enterprise; (a} where the intent of the governing.body is that the costs (expenses, including <br />depreciation} of providing goods or services to the general gublic on a continuing basis be financed or <br />recovered primarily through user charges; or (b) where the governing body has decided that periodic <br />deterrnination of revenue earned, expenses incurred, and/or net income is appropriate for capital <br />maintenance, public policy, management control, accountability, or other purposes. <br />Net Assets — The District's net assets are classified in the following three components: <br />Invested in capital assets, net of related debt — This component consists of capital assets, net of <br />accumulated depreciation, and reciuced by the outstanding balances of any bonds, mortgages, <br />notes, or other barrowings that are attributable to the acquisition, construction, or improvement of <br />those assets_ If there are significant unspent related debt proceeds, the portion of the debt <br />attributable to the unspent proceeds is not included in the calculation of invested in capital assets, <br />net of related debt. Rather, that portion of the debt is included in the same net assets component <br />as the unspent proceeds. <br />• Restricted — This component consists of net assets which have constraints placed on the use of <br />the assets through extemal constraints imposed by creditors (such as thraugh debt covenants), <br />contributors, or laws or regulations of other governxnents or constraintr imposed by law through <br />constitutional provisions or enabling legislation_ <br />. Unrestricted net assets — This companent consists of net assets that do not meet tbe definition of <br />"restricted" or "invested in eapital assets, net of related debt." <br />