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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 />Assets, liabilities deferred outflows/inflows of resources and net position/fund balance <br />(continued <br />12.Use of Estimates <br />The preparation of financial statements in conformity with GAAP requires management to make <br />estimates and assumptions that affect the amounts reported in the financial statements. Actual <br />amounts could vary from those estimates. <br />13.Budgetary Information <br />Annual budgets are adopted on a basis consistent with GAAP. Annual appropriated budgets are <br />adopted for the general, special revenue funds and debt service funds. All annual appropriations <br />lapse at fiscal year-end. Project length financial plans are adopted for all capital projects funds <br />and are revised annually. <br />14.Deferred outflows/inflows of resources <br />In addition to assets, the statement of financial position will sometimes report a separate section <br />for deferred outflows of resources. This separate financial statement element, deferred outflows <br />of resources, represents a consumption of net position that applies to a future period(s) and so will <br />not be recognized as an outflow of resources (expense/ expenditure) until then. The government <br />only has one item that qualifies for reporting in this category. It is the deferred charge on <br />refunding reported in the government-wide statement of net position. A deferred charge on <br />refunding results from the difference in the carrying value of refunded debt and its reacquisition <br />price. This amount is deferred and amortized over the shorter of the life of the refunded or <br />refunding debt. <br />In addition to liabilities, the statement of financial position will sometimes report a separate <br />section for deferred inflows of resources. This separate financial statement element, deferred <br />inflows of resources, represents an acquisition of net position that applies to a future period(s) and <br />so will not be recognized as an inflow of resources (revenue) until that time. The government has <br />only two types of this item, one which arises under a modified accrual basis of accounting; <br />unavailable revenue which is reported only in the governmental funds balance sheet. The <br />governmental funds report unavailable revenues. These amounts are deferred and recognized as <br />an inflow of resources in the period that the amounts become available. The other type is the <br />deferred gain on refunding reported in the government-wide statement of net position. A deferred <br />gain on refunding results from the difference in the carrying value of refunded debt and its <br />reacquisition price. This amount is deferred and amortized over the shorter of the life of the <br />refunded or refunding debt. <br />Draft 3/5/2015 <br />32 <br /> <br />