2012 Comprehensive Annual Financial Report - the City of Tukwila

CITY OF TUKWILA: 2012 CAFRNOTES TO THE FINANCIAL STATEMENTSDepreciation is computed using the straight line method over estimated service lives, as follows:AssetBuildingsNon-Building ImprovementsUtility PlantMachinery and EquipmentIntangiblesInfrastructureEstimated Service Life25 to 50 years25 to 50 years10 to 50 years2 to 50 years2 to 50 years25 to 50 yearsSee Note 7 for additional information on capital assets.Other Long-Term LiabilitiesThese liabilities are current obligations that are due within one year and include accounts payable,accrued liabilities, and other debts. The Self Insurance fund includes an incurred but not reported(IBNR) liability of $655,300 determined using actuarial methods. This liability is multiplied by a factor of2.5 to meet the City’s financial goal of maintaining reserves at 1 x IBR for claim fluctuations plus 1.5 xIBNR for the IBNR liability of $1,638,250.Compensated AbsencesCity policy and labor contracts with City of Tukwila employees call for the accumulation of vacation andsick leave. At termination of employment, employees with the required length of service may receivecash payments for all accumulated vacation leave to a maximum of 384 hours. Sick leave terminationbenefits are based on a percentage of accumulated sick leave up to a maximum of 180 hours. Thepayment is based on current wages at termination.The entire compensated absence liability is reported on the government-wide financial statements. Inthe enterprise funds, the entire amount of compensated absences is reported as a fund liability. Thisreporting format is in compliance with GASB Statement No. 16.The current portion reported on the schedule of long-term liabilities is calculated using the first-in-firstout(FIFO) approach.Long-Term ObligationsIn the government-wide financial statements, and proprietary fund types in the fund financialstatements, long-term debt and other long-term obligations are reported as liabilities in the applicablegovernmental activities, business-type activities, or proprietary fund type statement of net position.Bond premiums and discounts, as well as issuance costs, are deferred and amortized over the life ofthe bonds using the straight line method. Bonds payable are reported net of the applicable bondpremium or discount. Bond issuance costs are reported as deferred charges and amortized over theterm of the related debt.In the fund financial statements, governmental fund types recognize bond premiums and discounts, aswell as bond issuance costs, during the current period. The face amount of debt issued is reported asother financing sources. Premiums received on debt issuances are reported as other financing sourceswhile discounts on debt issuances are reported as other financing uses. Issuance costs, whether or notwithheld from the actual debt proceeds received, are reported as debt service expenditures. Long-termdebt outstanding at year-end is outlined in Note 11.59