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Indian River County , Florida ' <br /> Notes To Financial Statements <br /> Year Ended September 30 , 2007 <br /> NOTE 2 - RECONCILIATION OF GOVERNMENT-WIDE AND FUND FINANCIAL <br /> STATEMENTS - Continued <br /> B . Explanation of Differences Between Governmental Fund Operating Statements and the <br /> Statement of Activities <br /> The "net change (decrease) in fund balances" for governmental funds ($ 43 , 760 , 013 ) differs from the <br /> "change in net assets" for governmental activities ($ 50 , 643 , 009) reported in the statement of activities . <br /> The differences arise primarily from the long-term economic focus of the statement of activities versus <br /> the current financial resources focus of the governmental funds . The effect of the differences <br />is <br /> illustrated below . <br /> Capital related items <br /> When capital assets that are to be used in governmental activities are purchased or constructed, the <br /> resources expended for those assets are reported as expenditures in governmental funds . However , in <br /> the statement of activities , the costs of those assets is allocated over their estimated useful lives and <br /> reported as depreciation expense . As a result, fund balances decrease by the amount of financial <br /> resources expended, whereas net assets decrease by the amount of depreciation expense charged for the <br /> year . <br /> Capital outlay $ 107 , 776 , 962 <br /> Depreciation expense ( 14 , 6861564) <br /> Loss on assets ( 1 , 501 , 635 ) <br /> Difference $ 91 , 588 , 763 <br /> Long- Term Debt Transactions <br /> Capital lease proceeds provide current financial resources to governmental funds , but the capital lease <br /> increases liabilities in the statement of net assets . <br /> Capital lease proceeds S (264 . 467) <br /> Repayments of bond principal and capital lease principal are reported as an expenditure in the <br /> governmental funds and , thus , have the effect of reducing fund balance because current financial <br /> resources have been used . However, the principal payments reduce the liabilities in the statement of net <br /> assets and do not result in an expense in the statement of activities , ° <br /> Bond principal payments made $ 4 , 6155000 <br /> Bond premium payments made 935225 <br /> Capital lease principal payments made 255 , 876 <br /> Total $4 , 964 , 101 <br /> Some expenses reported in the statement of activities do not require the use of current financial <br /> resources , therefore , are not reported as expenditures in governmental funds . <br /> Net change in compensated absences x ( 396 , 475 ) <br /> 58 <br />