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Indian River County, Florida Notes To Financial Statements Year Ended September 30, 2007 NOTE 1— SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES — Continued 446 D. Assets, Liabilities, and Net Assets or Equity - Continued 9. Capital Assets - Continued Property, plant, and equipment of the primary government, as well as the component units, are depreciated using the straight-line method over the following estimated useful lives: Assets 40 Building and improvements Machinery and equipment Utility distribution system Road and bridge infrastructure Fiberoptics Beach preservation infrastructure 10. Capitalization of Interest MT 25-50 3-10 25-50 20-50 20 7 ..W Interest costs related to bond issues are capitalized during the construction period. These costs are netted against applicable interest earnings on construction fund investments. During the current period, the County did not have any capitalized interest. 11. Unearned Revenues Unearned revenues reported in government -wide financial statements would be recognized as revenue in the fiscal year they are earned. In accordance with the modified accrual basis of accounting, deferred revenues reported in governmental fund financial statements represent revenues, which are measurable 10 but not available, and are reported as assets with a corresponding liability. 12. Accrued Compensated Absences The County accrues accumulated unpaid vacation and sick leave when earned by the employee. The current portion is the amount estimated to be used in the following year. The non-current portion is the amount estimated to be used in subsequent fiscal years. Both the current and non-current estimated accrued compensated absences amounts for governmental funds are maintained separately and represent a reconciling item between the fund and government -wide presentations. 13. Obligation for Bond Arbitrage Rebate Pursuant to Section 148(f) of the U. S. Internal Revenue Code, the County must rebate to the United States Government the excess of interest earned from the investment of certain debt proceeds and pledged revenues over the yield rate of the applicable debt. The County uses the "revenue reduction" approach in accounting for rebatable arbitrage. This approach treats excess earnings as a reduction of revenue. The County has no arbitrage liability outstanding as of September 30, 2007.