Comprehensive Annual Financial Report (CAFR) - Johnson City

CITY OF JOHNSON CITY, TENNESSEENOTES TO THE FINANCIAL STATEMENTSFor the Fiscal Year Ended Jnne 30, 20111. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED):D. Assets, liabilities and net assets or equity (continued)6. Compensated absences (continued)Policy of Schools. Teachers' vacation and sick leave are in accordance with state policies.Most other school employees do not accumulate vacation or sick leave in excess of a normalyear's accumulation. Vacation is earned and accumulates at one day per month. Administrativepersonnel are allowed to accumulate vacation days and may earn up to 20 days per year after 10years of service. Employees have eighteen months to use the vacation time or it is lost. Fivedays of vacation can be converted to sick time for carryover forretirement. Unused sick time isnot compensated. Accrued vacation has been recorded for the twelve month administrativepersonnel in the government-wide and fund financial statements. It is estimated that any accrualfor ten month employees would be immaterial.Policy of the Johnson City Power Board. Employees earn various vacation days determined onyears of service. Vacation days can be accumulated to a maximum of 40 days, which arepayable upon separation of employment. Sick leave is granted after 90 days of employment.The employee earns one day for each one full month employed. Sick leave can be accumulatedwith no limitation as to the number of days. No obligation exists for payment of accumulatedsick leave upon termination for reasons other than death or retirement. On date of retirement ordeath, the Power Board is obligated for 75% of accumulated days. A liability for compensatedabsences · and related fringe benefits is reflected in the statement of net assets and in theproprietary fund financial statements. The portion of this liability expected to be paid withinone year is classified as a current liability and the remainder as a long-term liability.7. Long-term obligationsIn the government-wide fmancial statements, and proprietary fund types in the fund financialstatements, long-term debt and other long-term obligations are reported as liabilities in theapplicable governmental activities, business-type activities, or proprietary fund type statementof net assets. Bond premiums and discounts are deferred and amortized over the life of thebonds using the effective interest method or the straight-line method. Bonds payable arereported net of the applicable bond premium or discount. Bond issuance costs are reported asdeferred charges and amortized over the term of the related debt.In the fund financial statements, governmental fund types recognize bond premiums anddiscounts, as well as bond issuance costs, during the current period. The face amount of debtissued is reported as other financing sources. Premiums received on debt issuances are reportedas other financing sources while discounts on debt issuances are reported as other financinguses. Issuance costs, whether or not withheld from the actual debt proceeds received, arereported as debt service expenditures.50