2025 Annual Comprehensive Report

constructed capital assets are reported at cost or estimated historical cost. The cost of normal maintenance and repairs that do not add value to the asset or materially extend assets lives are not capitalized. General capital assets and the related accumulated depreciation are reported for the City using the straight-line method over the following estimated useful lives: Buildings, 40 years; Improvements, 20 years; Equipment, 5-20 years and Infrastructure as follows: Streets, 50 years; Sidewalks, 40 years; Bridges, 50 years; Water/Sewer, 40 years and Stormwater Improvements, 30-75 years. Depreciation of all exhaustible capital assets used by Proprietary Funds is charged as an expense against their operations. Capital assets also include certain right to use assets. These right to use assets (leases and SBITA’s) are initially measured at amount equal to the initial measurement of the related lease liability plus any lease payments made prior to the lease term, less lease incentives, and plus ancillary charges necessary to place the lease into service. The right to use assets are amortized on a straight-line basis over the life of the related lease. Intangible Assets of $96,735,958 as of June 30, 2025 are recorded in the Water Resources Enterprise Fund and represent rights to future raw water allocations from the Randleman Dam and reservoir project, in accordance with a joint venture agreement established in September 1987 with five other governmental entities to form a regional water supply. The intangible asset is based on City contributions to the Piedmont Triad Regional Water Authority for construction of the dam, reservoir, water treatment plant and surrounding infrastructure improvements as well as $1,005,688 of contributions recorded in Fiscal Year 2025, toward the City’s administrative and operating allocation. In Fiscal Year 2011, the City began amortizing the water rights over a period of 50 years with current year related amortization expense In addition to assets, the statement of financial position will sometimes report a separate section for deferred outflows of resources. This separate statement of net position, Deferred Outflows of Resources , represents a consumption of net assets that applies to a future period and so will not be recognized as an expense or expenditure until then. The City has several items that meet this criterion, a deferred loss on bond defeasance for General Obligation and Water and Sewer Refunding bonds and pension and OPEB deferrals. In addition to liabilities, the statement of financial position will sometimes report a separate section for deferred inflows of resources. This separate financial statement element, Deferred Inflows of Resources, represents an acquisition of net assets that applies to a future period and so will not be recognized as revenue until then. The City has certain items that meet the criterion for this category – deferrals of pension expense, leases and deferrals of Other Post Employment Benefit expense. In addition, revenue related to property tax, notes, and other accounts receivable that does not meet the availability criterion are reported in deferred inflows of resources in the governmental fund financial statements. The City reports unearned revenue on its government-wide and fund financial statements. Deferred Inflows for Grants arise when potential revenue does not meet both the “measureable” and “available” criteria for recognition in the current period (fund financial statements). Unearned revenues arise when resources are unearned by the City and received before it has a legal claim to them. In subsequent periods, when both revenue recognition criteria are met, or when the City has a legal claim to the resources, the liability for unearned revenue is removed from the applicable financial statement and revenue is recognized. 8. Long-Term Liabilities Long-term debt and other long-term obligations are reported as liabilities in the applicable governmental activities, business-type activities, or proprietary fund-type statement of net position in the government-wide financial statements, and proprietary fund-types in the fund financial statements. Bond premiums and discounts amortized over the life of the bonds using the effective interest rate method. Gains or losses on refundings are deferred and recognized as resource flows over the life of the bonds. Bond issuance costs are expensed in the reporting period in which they are incurred. In the fund financial statements, governmental fund types recognize bond premiums and discounts, as well as bond issuance cost during the current period. The face amount of debt issued is reported as an “Other Financing Source”. Premiums received on debt issuances are reported as “Other Financing Sources” while discounts on debt issuances are totaling $1,934,719. Accumulated amortization totals $27,049,131. 7. Deferred Outflows/Inflows of Resources and Unearned Revenues

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