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2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) <br /> E. Physical Facilities and Depreciation <br /> Capital assets, which consist of a water production and distribution system, are shown at <br /> original cost. Interest paid during construction of facilities, if any, is also included in this <br /> cost. Depreciation has been provided for the Authority's water production and distribution <br /> system using the straight -line method over a 30 -year estimated useful life. <br /> 3. CASH AND CASH EQUIVALENTS <br /> Cash and cash equivalents represent the Authority's equity interest in the City's consolidated cash <br /> and cash equivalents account consisting of demand accounts and short-term investments with <br /> maturity at date of purchase of three months or less. State statutes require that all funds in <br /> depository institutions be covered by federal depository insurance and/or be secured in the manner <br /> provided by law for security of funds. Cash and cash equivalent balances held by the City were <br /> entirely covered by federal depository insurance or security as required at September 30, 2010. <br /> At year -end, a portion of the Authority's cash was restricted as follows: <br /> Restricted for retirement of current debt service liabilities <br /> and reserve requirements per bond covenants $ 684,768 <br /> Total restricted cash $ 684,768 <br /> 4. TEMPORARY INVESTMENTS <br /> Temporary investments represent the Authority's equity interest in the City's investment pool. <br /> The carrying amount for temporary investments at September 30, 2010, was $1,244,270, which <br /> is fair value. This represents 3.717% of the City's total portfolio. <br /> Interest Rate Risk <br /> The Authority's investment policy specifies that the maximum stated maturity, from the date of <br /> purchase for any individual investment may not exceed five years and the maximum weighted <br /> average maturity may not exceed two years. At year -end, the Authority's weighted average <br /> maturity of the investment portfolio was as follows: <br /> Weighted Average <br /> Investment Type Maturity (Days) <br /> Federal Home Loan Bank 476 <br /> (continued) <br /> 12 <br />