2018 City of Shakopee Comprehensive Annual Financial Report

CITY OF SHAKOPEE NOTES TO THE FINANCIAL STATEMENTS DECEMBER 31, 2018

NOTE 7 – LEASES (CONTINUED) B. Capital Leases

The government has entered into a lease agreement as lessee for financing the community center weight equipment with a down payment of $1,845. This lease agreement qualifies as a capital lease for accounting purposes and, therefore have been recorded at the present value of its future minimum lease payment as of the inception date. The asset acquired through a capital lease is as follows: Asset: Machinery and Equipment 79,100 $ Less: Accumulated Depreciation (7,906) Total 71,194 $ The future minimum lease obligation and the net present value of the minimum lease payments as of December 31, 2018 were as follows:

Governmental Activities

Year Ending Dec. 31

2019 2020 2021

$

22,140 22,140

5,535

Total MinimumLease Payments Less: Amount Representing Interest

49,815 (3,273) 46,542

Present Value of MinimumLease Payments

$

NOTE 8 – LONG-TERM DEBT A. General Obligation Bonds

The City issues general obligation (G.O.) bonds to provide for financing tax increment projects, street improvements and construction of government buildings. Debt service is covered respectively by tax increments and special assessments against benefited properties with any shortfalls being paid from general taxes. G.O. bonds are direct obligations and pledge the full faith and credit of the City. These bonds generally are issued as serial bonds with equal debt service payments each year. G.O. bonds currently outstanding are shown on the following page.

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