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Little Thompson Water District <br /> Notes to Financial Statements <br /> December 31, 2009 <br /> Note 1 -Summary of Significant Accounting Policies <br /> Allowance for Doubtful Accounts <br /> No allowance is made for bad debts in the accompanying financial statements as substantially all revenues <br /> of the District originate from charges to the owners of the District, and thus, bad debts are deemed unlikely. <br /> Revenue Recognition <br /> Revenues are recognized when earned. Metered water accounts are read and billed three times a month <br /> on 30 day cycles. Unbilled water charges are accrued for the period from the last meter reading through <br /> year-end and are included in accounts receivable. Unbilled accounts receivable amounted to $164,618 <br /> and $175,024 at December 31, 2009 and 2008, respectively. <br /> Inventories <br /> Inventories, consisting primarily of operating supplies for water meter repair and installation, have been <br /> valued at cost, on a first-in first-out basis. <br /> Capital Assets <br /> Capital assets purchased or acquired with an original cost of$5,000 or more are reported at historical cost. <br /> Expenditures for maintenance and repairs are charged to operations as incurred. Property replacements <br /> and improvements, which extend the lives of assets, are capitalized and subsequently depreciated. <br /> Contributed assets are reported at their fair market value at the date received. <br /> Property and equipment of the District is depreciated using the straight line method over the following <br /> estimated useful lives. <br /> Description Estimated Lives <br /> Water rights N/A <br /> Land and easements N/A <br /> Construction in progress N/A <br /> Distribution system 25 -50 years <br /> Dry Creek reservoir dam 100 years <br /> Buildings and improvements 20-50 years <br /> Vehicles and equipment 5- 10 years <br /> Depreciation expense total $1,404,434 and $1,288,908 for the years ended December 31, 2009 and 2008, <br /> respectively. <br /> Joint Venture <br /> The District is a participant with Central Weld County Water District ("CWCWD"), in a joint venture to <br /> operate Carter Lake Filter Plant(the"Plant"), the filter plant from which the District and CWCWD purchase <br /> 100% of their water. The Plant is governed by a six-member board of directors composed of three <br /> appointees from the District and three from CWCWD. The District and CWCWD are each charged for their <br /> respective share of the water purchased from the Plant, and may be assessed for capital improvements <br /> made at the plant on a periodic basis. Beginning in 2008, the District and CWCWD revised the joint <br /> venture agreement in order to change the way that major improvements to the Plant are funded. Major <br /> capital improvements to the plant are no longer funded by the Plant, with assessments issued to each <br /> district; but rather, they are funded by the individual districts independently, and included in each of the <br /> district's capital assets. As such, the depreciation expense for these assets has also been reflected in the <br /> financial statements of the District and CWCWD. The District's net investment and its share of the <br /> operating results of the Plant are reported in the accompanying Statements of Net Assets, and Revenues, <br /> Expenses and Changes in Net Assets. The District's equity interest in the Plant was $4,734,435 and <br /> $4,872,169 at December 31, 2009 and 2008, respectively. Complete financial statements for the Plant <br /> may be obtained from the Plant's administrative office at 7100 W. County Road 8-E, Berthoud, Colorado <br /> 80521. <br /> 14 <br />