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Indian River County, Florida <br />Notes To Financial Statements <br />Year Ended September 30, 2006 <br />NOTE 1- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued <br />D. Assets, Liabilities, and Net Assets or Equity - Continued <br />9. Capital Assets - Continued <br />Property, plant, and equipment of the primary government, as well as the component units, are <br />depreciated using the straight-line method over the following estimated useful lives: <br />Assets Year <br />Building and improvements 25-50 <br />Machinery and equipment 3-10 <br />a Utility distribution system 25-50 <br />Road and bridge infrastructure 20-50 <br />10. Capitalization of Interest <br />Interest costs related to bond issues are capitalized during the construction period. These costs are <br />netted against applicable interest earnings on construction fund investments. During the current period, <br />the County did not have any capitalized interest. <br />D11. Unearned Revenues <br />Unearned revenues reported in government -wide financial statements would be recognized as revenue in <br />a the fiscal year they are earned in accordance with the accrual basis of accounting. In accordance with the <br />modified accrual basis of accounting, unearned revenues reported in governmental fund financial <br />statements represent revenues, which are measurable but not available. <br />12. Accrued Compensated Absences <br />The County accrues accumulated unpaid vacation and sick leave when earned by the employee. The <br />current portion is the amount estimated to be used in the following year. The non-current portion is the <br />amount estimated to be used in subsequent fiscal years. Both the current and non-current estimated- <br />accrued <br />stimatedaccrued compensated absences amounts for governmental funds are maintained separately and represent <br />a reconciling item between the fund and government -wide presentations. <br />n13. Obligation for Bond Arbitrage Rebate <br />Pursuant to Section 148(f) of the U. S. Internal Revenue Code, the County must rebate to the United <br />States Government the excess of interest earned from the investment of certain debt proceeds and <br />pledged revenues over the yield rate of the applicable debt. The County uses the "revenue reduction" <br />approach in accounting for rebatable arbitrage. This approach treats excess earnings as a reduction of <br />revenue. The County has no arbitrage liability outstanding as of September 30, 2006. <br />1 <br />E51 <br />