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REDEVELOPMENT AGENCY OF SAN LEANDRO NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2006 1. SUMl\1ARy OF SIGlNIFICANT ACCOUNTING POLICIES (Continued) J. Deferred or Unearned Revenues Deferred revenues represent an off-set for revenue in which asset recognition criteria has been met, but where revenue recognition criteria has not been met. The Agency has reported as deferred rcvenues, receivables from project developer and notes receivable from homeowners and related accrued interest; as such amounts are measurable but are not available. K. Net Assets and Fund Equity In the Government-Wide Financial Statements, net assets are classified in the following categories: Invested in Capital Assets, Net of Related Debt - This amount consists of capital assets net of accumulated depreciation and reduced by outstanding debt that attributed to the acquisition, construction, or improvement of the assets. Restricted Net Assets - This amount is restricted by external creditors, grantors, contributors, or laws or regulations of governments. Unrestricted Net Assets - This amount is all net assets that do not meet the definition of "invested in capital assets, net of related debt" or "restricted net assets as defined above. In the Fund Financial Statements, fund equity are reservations and designations of fund balances of governmental funds and unrestricted net assets of proprietary funds are created to either satisfy legal covenants, including State laws, that require a portion of the fund equity be segregated or identify the portion ofthe fund equity not available for future expenditures. L. Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles rcquires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ [rom those estimates. M. Change in Accounting Principles In December 2004, GASB issued GASBS No. 46, Net Assets Restricted by Enabling Legislation. This Statement clarifies that a legally enforceable enabling legislation restriction is one that a party external to a government, such as citizens, public interest groups, or the judiciary, can compel a government to honor. The Statement states that the legal enforceability of an enabling legislation restriction should be reevaluated if any of the resources raised by the enabling legislation are used for a purpose not spccified by the enabling legislation or if a government has other cause for reconsideration. Although the detennination that a particular restriction is not legally enforceable may cause a government to review the enforceability of other restrictions, it should not n~cessarily lead a government to the same conclusion for all enabling legislation restrictions. 21