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1e INDIAN RIVER COUNTY, FLORIDA NOTES TO FINANCIAL STATEMENTS - CONTINUED Year Ended September 30, 1990 1. Summary of Significant Accounting Policies - Continued: I. Property, Plant and Equipment - Continued (2) Property, plant and equipment of the Proprietary Fund types are recorded at cost. Donated property, plant and equipment are capitalized at their fair market value at the time received. Depreciation is provided using the straight-line method over the estimated useful lives of the various classes of depreciable assets. The estimated useful lives of the various classes of depreciable assets are as follows: Assets Years Building and improvements 25 - 40 Machinery and equipment 3 - 10 Utility distribution systems 25 - 50 J. Capitalization of Interest - Interest costs related to bond issues are capital- ized during the construction period. These costs are netted against applicable interest earnings on construction fund investments. During the current period, the Water and Sewer System Enterprise Fund incurred interest expense during the construction period totaling $498,333. Related interest earnings on construc- tion fund investments totaled $138,630 for net capitalized interest of $359,703. K. Unamortized Bond Costs - Bond issue costs and legal fees associated with the issuance of Proprietary Fund revenue bonds are amortized over the life of the bonds using the straight-line method of accounting. L. Unamortized Bond Discount - Bond discount associated with the issuance of Proprietary Fund revenue bonds are amortized according to the interest method, which results in a constant rate of interest being applied to the amount out- standing at any given time. For financial reporting, unamortized bond discount is netted against applicable long-term debt. M. Intangible Assets - Land use rights purchased by the Water and Sewer System Fund from the Golf Course Fund for irrigating the golf course with treated effluent are being amortized using the straight-line method over the estimated useful life of 20 years. N. Deferred Revenues - Deferred revenues reported in applicable Governmental Fund Types represent unearned revenues or revenues which are measurable but not available and, in accordance with the modified accrual basis of accounting, are reported as deferred revenues. The deferred revenues will be recognized as revenue in the fiscal year they are earned or become available. 111 19