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PENROSE W A TER DISTRICT <br /> 340 Grant Street — Penrose,CO 81240 <br /> Statement of Cash Flows <br /> The District considers all highly liquid investments with an original maturity of three months or less to be cash <br /> equivalents. <br /> Fixed Assets and Depreciation <br /> Enterprise fund fixed assets are capitalized in the fund accounts because the fixed assets are used in the production <br /> of water sold. The District's policy is to capitalize fixed assets with an original cost of$5,000 or more and and <br /> estimated useful life of at least 3 years. Depreciation is provided, for those assets subject to depreciation, over the <br /> estimated useful lives using the straight-line method. The estimated useful lives are as follows: <br /> Description Estimated Useful Life <br /> Plant and water lines 30–40 years <br /> Building and improvements 10–30 years <br /> Equipment 5–10 years <br /> Reclassifications <br /> Various items for 2010 have been reclassified to conform to 2011 presentation. <br /> Net Assets <br /> Net assets present the difference between assets and liabilities in the statement of net assets. Net assets invested in <br /> capital assets are reduced by the outstanding balances of any borrowing used for the acquisition, construction or <br /> improvement of those assets. Net assets are reported as restricted when there are legal limitations imposed on their <br /> use by external restrictions by creditors,grantors,laws,or regulations of other governments. <br /> Inventory <br /> Inventories of materials and supplies are recorded on the balance sheet at the lower of cost or market using the first- <br /> in,first-out method of accounting. <br /> Property Tax Revenue Recognition <br /> Property taxes attach as an enforceable lien on property as of January 1. Taxes are levied November 15 and are due <br /> and payable to the County Treasurer in full by April 30 or in two equal installments due February 28 and June 15 of <br /> the ensuing year. <br /> Property taxes to be collected in 2012 are accrued as a receivable and the related deferred revenue recorded. <br /> Property tax revenue is recognized as income as it becomes measurable and available. <br /> Budgetary Practices <br /> The District follows these procedures in establishing the budgetary data reflected in the financial statements: <br /> (1) In September the proposed budget is submitted to the District Board and a"Notice of Budget" is published <br /> stating that the proposed budget is on file for inspection. <br /> (2) In December the budget is approved and adopted fixing the rate of levy of taxation upon taxable property <br /> within the District and levies are certified to the county. A certified copy of the adopted budget is sent to the <br /> Division of Local Government within 30 days of adoption. <br /> (3) Prior to December 31,the District enacts an appropriation resolution for the ensuing fiscal year. <br /> 12 <br />