review of all accounts and includes a consideration of past user history, any adverse situationsthat might affect the user's ability to repay, and current economic conditions. The need for an adjustment to the allowance is considered at year end. Amounts charged-off that are subsequently recovered are recorded as income. The allowance for doubtful accounts at June 30, 2007 was $203,738.
There appears to be concentration of credit risk with regard to general accounts receivable and more specifically accounts receivable for water and sewer user fees in the enterprise fund. The City's ability to collect the amounts due from the users of the City water and sewer system and others (as reflected on the financial statements) may be affected by significant economic fluctuations, natural disaster or other calamity in this one concentrated geographic location.
Inventory is valued at cost using the first-in/first-out (FIFO) method. The costs of governmental fund type inventories are recorded as expenditures when consumed rather than when purchased.
Capital assets, which include property, plant and equipment are reported in the applicable governmental or business type activities columns in the government-wide financial statements. Capital assets are capitalized at historical cost or estimated cost if historical is not available. Donated assets are recorded as capital assets at their estimated fair market value at the date of donation.
The costs of normal maintenance and repairs that do not add to the value of the asset or materially extend the life of assets are not capitalized. Depreciation of all exhaustible capital assets is recorded as an allocated expense in the statement of activities, with accumulated depreciation reflected in the statement of net assets. Depreciation is provided over the estimated useful lives of assets using the straight-line method of depreciation. The range of estimated useful lives by type
of asset is as follows:
Property and plant Equipment Transportation equipment
15-50 years 5-15 years 5 years
In the fund financial statements, capital assets used in governmental fund operations are accounted for as capital outlay expendituresof the governmental fund upon acquisition. Capital assets used in proprietary fund operation-s are accounted for the same as in the government-wide statements.
All permanent, njll-time employees earn from 10 to 30 days of vacation leave each year, depending upon length of service. Vacation leave is available for use by employees in the fiscal year succeeding the year it was earned and can be accumulated indefinitely, Upon resignation, termination, or retirement, unused vacation leave is paid to the employee at the employee's current rate of pay.