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City of San Leandro
<br />Notes to Basic Financial Statements
<br />For the year ended June 30, 2012
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<br />78
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<br />NOTE 10 – NET ASSETS AND FUND BALANCES
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<br />A. Net Assets
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<br />Net Assets is the excess of all the City’s assets over all its liabilities, regardless of fund. Net Assets are divided into
<br />three captions. These captions apply only to Net Assets, which is determined only at the Government -wide level, and
<br />are described below:
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<br />Invested in Capital Assets, net of related debt describes the portion of Net Assets which is represented by the current
<br />net book value of the City’s capital assets, less the outstanding balance of any debt issued to finance these assets.
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<br /> Restricted net Assets describes the portion of Net Assets which is restricted as to use by the terms and conditions of
<br />agreements with outside parties, governmental regulations, laws, or other restrictions which the City cannot
<br />unilaterally alter. These principally include capital projects, debt service requirements, and special revenue programs
<br />restricted to special revenue purposes such as Measure B, special Gas Tax, Grant funds, and other special revenue
<br />funds.
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<br /> Unrestricted describes the portion of Net Assets which is not restricted to use.
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<br />B. Fund Balances
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<br />Governmental fund balances represent the net current assets of each fund. Net current as sets generally represent a
<br />fund’s cash and receivables, less its liabilities.
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<br />The City’s fund balances are classified in accordance with Governmental Accounting Standards Board Statement
<br />Number 54 (GASB 54), Fund Balance Reporting and Governmental Fund Type Definitions, which requires the City to
<br />classify its fund balances based on spending constraints imposed on the use of resources. For programs with multiple
<br />funding sources, the City prioritizes and expends funds in the following order: Restricted, Committed, Assigned, and
<br />Unassigned. Each category in the following hierarchy is ranked according to the degree of spending constraint:
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<br />Nonspendable represents balances set aside to indicate items do not represent available, spendable resources even
<br />though they are a component of assets. Fund balances required to be maintained intact, such as Permanent Funds, and
<br />assets not expected to be converted to cash, such as prepaid, notes receivable, and land held for redevelopment are
<br />included. However, if proceeds realized from the sale or collection of nonspendable assets are restricted, committed
<br />or assigned, then Nonspendable amounts are required to be presented as a component of the applicable category.
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<br />Restricted fund balances have external restrictions imposed by creditors, grantors, contributors, laws, regulations, or
<br />enabling legislation which requires the resources to be used only for a specific purpose. Encumbrances and
<br />nonspendable amounts subject to restrictions are included along with spendable resources.
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<br />Committed fund balances have constraints imposed by formal action of the City Council which may be altered only by
<br />formal action of the City Council. Encumbrances and nonspendable amounts subject to council commitments are
<br />included along with spendable resources. As of June 30, 2012, the City does not have committed fund balance.
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<br />Assigned fund balances are amounts constrained by the City’s intent to be used for a specific purpose, but are neither
<br />restricted nor committed. Intent is expressed by the City Council or its designee and may be changed at the discretion
<br />of the City Council or its designee. This category includes encumbrances; Nonspendable, when it is the City’s intent to
<br />use proceeds or collections for a specific purpose, and residual f und balances, if any, of Special Revenue, Capital
<br />Projects and Debt Service Funds which have not been restricted or committed.
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<br />Unassigned fund balance represents residual amounts that have not been restricted, committed, or assigned. This
<br />includes the residual general fund balance and residual fund deficits, if any, of other governmental funds.
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