02-08-17 Regular Meeting of the La Porte Area Water Authority

Browse Search

C. Basis of Accounting Enterprise Funds are accounting for on a flow of economic resources measurement focus and the accrual basis of accounting. With this measurement focus, all assets and all liabilities associated with the operation of these funds are presented on the statement of net position is a classified format to distinguish between current and long-term assets and liabilities. Net position is presented in three components: net investment in capital assets; restricted; and unrestricted. D. Cash and Investments For purposes of the statement of cash flows, the Authority considers cash held in demand accounts and all short-term investments with a maturity date of purchase of three months or less from the date of acquisition to be cash equivalents. Investments for the Authority are reported at fair value, except for the position in investment pools. The Authority's investments in Pools are 20-like pools and are reported at the net asset value per share (which approximates fair value) even though it is calculated using the amortized cost method. A 20-like pool is one which is not registered with the Securities and Exchange Commission ("SEC") as an investment company, but nevertheless has a policy that it will, and does, operate in a manner consistent with the SEC's Rule 2a7 of the Investment Act of 1940. E. Capital Assets The Authority defines capital assets with an initial, individual cost of $5,000 or greater and an estimated useful life in excess of one year. All purchased capital assets are valued at cost where historical records exist. Donated capital assets are recorded at their acquisition value, which is the price that would be paid to acquire an asset with equivalent service potential at the acquisition date. Capital assets consist of a water production and distribution system. Interest paid during construction of facilities, if any, is also included in this cost. Depreciation has been provided for the Authority's water production and distribution system using the straight-line method over a 30-year estimated useful life. The cost of normal maintenance and repairs that do not add to the value of the asset or materially extend asset lives are not capitalized. F. Operating and Nonoperating Revenues and Expenses The Authority distinguishes operating revenues and expenses from nonoperating items. Operating revenues and expenses generally result from providing services and producing and delivering goods in connection with the Authority's principal ongoing operations. The principal operating revenues of the Authority are charges to customers for sales and services. Operating expenses for the Authority include cost of sales and services, administrative expenses, and depreciation on capital assets. All revenues and expenses not meeting this definition are reported as nonoperating revenues and expenses. 12