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Indian River County, Florida Board of County Commissioners Notes To Financial Statements Year Ended September 30, 2011 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued F. Inventories Inventories are valued at cost, which approximates market, using the "first -in, first -out" method of accounting, with the exception of the Shooting Range and Fleet Internal Service Fund's inventories which are valued using the average cost method of accounting. Inventories of all funds are recorded as expenditures (expenses) when consumed rather than when purchased. G. Prepaid Items This account represents prepayments for services that will be used in future periods. The Board's policy is to record the expenditure for the services when they are used rather than when the cash is disbursed. H. Other Assets Held For Resale This account represents assets the Board has purchased with the intent to resell. In fiscal year 2009, the Board was allocated $4.6 million from the U.S. Department of Housing and Urban Development's Neighborhood Stabilization Program under a Community Development Block Grant. This funding was to be used by local governments for acquiring, redeveloping, and reselling foreclosed properties that might otherwise become sources of abandonment within their communities. At September 30, 2011, ten homes remain unsold. The Board intends to resell these homes in the next fiscal year. They are reported at the lower of cost or market value on the balance sheet of the Board's governmental funds. I. Capital Assets Capital assets, which include property, plant, equipment, infrastructure (e.g., roads, bridges, right-of- ways, water and sewer distribution systems, beach restoration, stormwater systems and similar items), and intangible assets (e.g. software, easements, and rights), are reported in the applicable governmental or business -type activities column in the government -wide financial statements. The Board defines capital assets as assets with an initial, individual cost of $1,000 or more and an estimated useful life in excess of one year. Except for roads and bridges constructed prior to October 1, 1981, assets are recorded at historical cost. Roads and bridges constructed prior to October 1, 1981 are reported at estimated historical cost. Donated capital assets are recorded at estimated fair market value at the date of donations. The costs of normal maintenance and repairs that do not add to the value of the asset nor materially extend its useful life are not capitalized. Major outlays for capital assets and improvements are capitalized as projects are constructed. Interest incurred during the construction phase of capital assets of business -type activities is included as part of the capitalized value of the assets constructed. The Board holds legal title to the capital assets used in the operations of the Board, Clerk of the Circuit Court, Property Appraiser, Supervisor of Elections and Tax Collector, and is accountable for them under Florida Law. Capital assets used by the Board's governmental funds are reported in the financial statements of the County. Capital assets of the Board's enterprise and internal service funds are reported in the Proprietary Funds' financial statements. 250