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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 /> Useful Life <br /> Asset Class (Years) <br /> Reservoir 50 <br /> Filtration plant 30 <br /> Water system 30 <br /> Equipment 5-20 <br /> Vehicles 5 <br /> Water Rights. The cost of water rights includes acquisition cost, legal and engineering <br /> costs related to the development and augmentation of those rights. Since the rights have a <br /> perpetual life, they are not amortized. All other costs, including costs incurred for the <br /> protection of those rights, are expensed. <br /> Property Taxes. Property taxes are levied by the District Board of Directors. The levy is <br /> based on assessed valuations determined by the County Assessor generally as of January 1 of <br /> each year. The levy is normally set by December 15 by certification to the County <br /> Commissioners to put the tax lien on the individual properties as of January 1 of the following <br /> year. The County Treasurer collects the determined taxes during the ensuing calendar year. <br /> The taxes are payable by April, or if in equal installments, at the taxpayer's election, in <br /> February and June. Delinquent taxpayers are notified in August and generally sales of tax liens <br /> on delinquent properties are held in November or December. The County Treasurer remits the <br /> taxes collected monthly to the District. Property taxes, net of estimated uncollectible taxes, are <br /> recorded initially as deferred revenue in the year they are levied and measurable. The deferred <br /> property tax revenue is recorded as revenue in the year that it is available or collected. <br /> Compensated Absences. Compensated absences are recorded as current salary when <br /> paid. It is the District's policy that compensated absences do not accumulate, therefore, no <br /> accrual is necessary. <br /> Tap Fees and Contributed Lines. Tap fees are recorded as non-operating revenue when <br /> received. Lines contributed to the District by developers are recorded as non-operating revenue <br /> and additions to the systems at the developer's cost. <br /> Net Assets. Net assets represent the difference between assets and liabilities. Net assets <br /> invested in capital assets, net of related debt consists- of capital assets, net of accumulated <br /> depreciation, reduced by the outstanding balances of any borrowing used for the acquisition or <br /> construction of improvements on those assets. Net assets are reported as restricted when there <br /> are limitations imposed on their use either through the enabling legislation adopted by the <br /> District or through external restrictions imposed by creditors, grantors, laws or regulations of <br /> other governments. <br /> Page 15 <br />