Comprehensive Annual Financial Report (CAFR) - Johnson City

CITY OF JOHNSON CITY, TENNESSEENOTES TO THE FINANCIAL STATEMENTSFor the Fiscal Year Ended June 30, 20111. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED):D. Assets, liabilities and net assets or equity (continued)2. Receivables and payables (continued)Property taxes are levied on September 1st on property values assessed as of January 1st. Thebillings are mailed by September 1st and a 1% discount is allowed through September 30th.After December 31st, the tax bill becomes delinquent and penalty and interest are assessed.Property taxes are declared to be a lien on the property after January lOth of the year ofassessment.3. Inventories and prepaid itemsAll inventories of governmental funds are valued at cost using the first~in/first-out (FIFO)method and are recOided as expenditures at the time purchased. All such inventories on hand atyear-end are reported as assets and nonspendable fund balance in the fund financial statements.All inventories of proprietary funds are valued at cost utilizing the weighted average or FIFOmethod and are expensed when consumed rather then when purchased.Certain payments to vendors reflect costs applicable to future accounting periods and arerecorded as prepaid items in both government-wide and proprietary fund financial statements .. 4. Restricted assetsCertain cash and investment balances of the City are classified as restricted assets on thestatement of net assets because they are maintained in separate accounts and their use is limitedby certain agreements and contracts with third parties. Restricted cash includes sinking fundaccounts established to meet the requirements of certain bond issues, escrow for constructioncontractors established to fund retainages of outstanding construction projects upon theircompletion, and savings accounts for tax equivalent payments, capital improvements, andunexpected expenses. Restricted investments include securities held for larger claims of a selfinsuranceprogram.5. Capital assetsCapital assets, which include property, plant, equipment, and infrastructure assets (e.g. roads,bridges, and similar items), are reported in the applicable governmental or business-typeactivities columns in the government-wide financial statements. Capital assets are defined bythe City as assets with an initial individual cost equal to or greater than $5,000 and an estimateduseful life in excess of one year for property, plant and equipment and assets with an initialindividual cost of more than $100,000 for infrastructure.47