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PINEWOOD SPRINGS WATER DISTRICT <br /> NOTES TO FINANCIAL STATEMENTS <br /> December 31,2011 and 2010 <br /> NOTE 1 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES—continued <br /> The enterprise fund is accounted for on a cost of services or "capital - maintenance" <br /> measurement focus. Under this concept, all assets and all liabilities associated with the <br /> activity (whether current or noncurrent) are reported on the balance sheet. The proprietary <br /> fund type operating statement reports increases (revenue) and decreases (expenses) in net total <br /> assets. <br /> The enterprise fund distinguishes operating revenues and expenses from non-operating <br /> items. Operating revenues and expenses generally result from providing services in connection <br /> with the fund's principal ongoing operations. The principal operating revenues are charges to <br /> customers for water. Operating expenses include the cost of services, administrative expenses, <br /> and depreciation on capital assets. All revenues and expenses not meeting this definition are <br /> reported as non-operating revenues and expenses. <br /> Allowance for Doubtful Accounts. Use and other similar fees set from time to time by <br /> the District's governing board constitute a perpetual lien on or against the property served until <br /> paid. Such liens may be foreclosed in the same manner as provided by the laws of the State of <br /> Colorado. Therefore, no provision for uncollectible receivables has been made. <br /> Amortization. Loan origination fees are amortized over the related debt teiui on the <br /> straight-line method. Amortization of these costs totaled $2,013 for the years ending <br /> December 31, 2011 and 2010. <br /> Cash Equivalents. For purposes of the statement of cash flows, the District considers <br /> cash deposits and highly liquid investments (including restricted assets) with a maturity of <br /> three months or less when purchased, to be cash equivalents. <br /> Property, Plant, and Equipment. Capitalized assets are defined by the District as assets <br /> that have a useful life of one or more years, and which the initial value equals or exceeds <br /> $2,500. All purchased assets are valued at cost. Donated assets are valued at their estimated <br /> fair market value on the date received. The cost of nounal maintenance and repairs that does <br /> not add to the value of an asset or materially extend asset life is not capitalized. Depreciation <br /> on all assets is provided on the straight-line basis over the following estimated useful lives: <br /> Page 14 <br />