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<br />REDEVELOPMENT AGENCY OF SAN LEANDRO <br /> <br />NOTES TO THE FINANCIAL STATEMENTS <br />FOR THE YEAR ENDED JUNE 30, 2006 <br /> <br />1. SUMMARy OF SIGNIFICANT ACCOUNTING POLICIES (Continued) <br /> <br />C. Use of RestrictedlUnrestricted Net Assets <br /> <br />When an expense is incurred for purposes for which both restricted and unrestricted net assets are available, <br />the Agency's policy is to apply restricted net assets first. <br /> <br />D. Cash and Investment <br /> <br />The Agency participates in the City's cash and investment pool which is managed by thc City Treasurer. <br />For purposes of reporting cash flows, the Agency considers each fund's share in the cash and investments <br />pool to be cash and cash equivalents. With respect to cash and investments held by fiscal agents, the <br />Agency considers investments with original maturities of three months or less to be cash equivalents <br />Investments income earned on the investment pool is distributed to the appropriate funds based on average <br />month-end balances. <br /> <br />In accordance with GASB Statement No. 31, Accounting and Financial Reporting for Certain Investments <br />and for External Investment Pools, highly liquid money market investments with maturities of one year or <br />less at time of purchase are stated at amortized cost. All other investments are stated at fair value. Market <br />value is used as fair value for those securities for which market quotations arc readily available. <br /> <br />The Agency participated in an investment pool managed by the State of California titled Local Agency <br />Investment Fund (LAIF), which has invested a portion of the pool funds in Structure Notes and Asset <br />Backed Securities. LAIF's investments are subject to credit risk with the full faith and credit of the State of <br />California collateralizing these investments. In addition, these Structure Notes and Asset-Backed Securities <br />are subject to market risk as to changes in interest rates. <br /> <br />E. Notes Receivable <br /> <br />Notes receivable and related accrued interest, net of deferred revenue, are fully reserved in the equity <br />section ofthc Capital Projects Funds balance sheet, as they do not represent "current fmancial resources". <br /> <br />F. Capital Assets <br /> <br />Capital assets are those assets acquired for general governmental purposes. Such assets currently purchased <br />or constructed are recorded at historical cost as expenditures in the Fund Financial Statements. For the <br />Agency Wide Financial Statements, capital assets that exceed $5,000, are capitalized and depreciated over <br />their useful lives. Contributed capital assets arc recorded at fair market value at the time received. <br /> <br />G. Long-Term Obligations <br /> <br />Government- Wide Financial Statements - Long-term debt and other fmanced obligations are reported as <br />liabilities in the governmental activities. <br /> <br />Fund Financial Statements - Long-term debt and other fmanced obligations are reported as liabilities in the <br />governmental activities. <br /> <br />19 <br />