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CITY OF LA PORTE, TEXAS <br />NOTES TO THE FINANCIAL STATEMENTS (continued) <br />Note 1 - Summary of Significant Accounting Policies (continued) <br />2.Receivables <br />All receivables are reported at their gross value and, where appropriate, are reduced by the <br />estimated portion that is expected to be uncollectible. <br />3.Due to and from Other Funds <br />Interfund receivables and payables arise from interfund transactions and are recorded by all funds <br />affected in the period in which transactions are executed. These receivables and payables are, for <br />the most part, eliminated from the Government-Wide Statement of Net Assets and are recorded as <br />“due from other funds” or “due to other funds” in the fund financial statements. <br />4.Inventory and Prepaid Items <br />Inventories are valued at costs using the first in/first out (FIFO) method. The costs of <br />governmental fund type inventories are recorded as expenditures when consumed rather than <br />when purchased. A portion of the fund balance is classified as non-spendable to reflect minimum <br />inventory quantities considered necessary for the District’s continuing operations. Certain <br />payments to vendors reflect costs applicable to future accounting periods and are recorded as <br />prepaid items. <br />5.Capital Assets <br />Capital assets are reported in the applicable governmental or business-type activities column in <br />the government-wide financial statements. The government defines capital assets as assets with <br />an initial, individual cost of $5,000 or greater and an estimated useful life in excess of one year. <br />All purchased Capital assets are valued at cost where historical records exist. Donated Capital <br />assets are valued at their estimated fair value on the date received. <br />The costs of normal maintenance and repairs that do not add to the value of the asset or materially <br />extend asset lives are not capitalized. Improvements, including public domain and equipment are <br />capitalized and Proprietary Fund Capital assets are depreciated over the remaining useful lives of <br />the related Capital assets using the straight line method, as applicable. <br /> Estimated <br />Asset Description Useful Life <br />Buildings 20 years <br />Building improvements 20 years <br />Infrastructure 20-30 years <br />Vehicles 4-10 years <br />Machinery and equipment 4-10 years <br />Water and sewer systems 20-40 years <br /> <br />29 <br /> <br />