Page 61 - Moreno Valley 2025 Annual Financial Report

City of Moreno Valley, California

Notes to Financial Statements
For the Year Ended June 30, 2025

Note 1. Organization and Summary of Significant Accounting Policies (Continued)

As a general rule, the effect of interfund activity has been eliminated from the
government-wide financial statements. Exceptions to this general rule are charges
between the government’s proprietary funds function and various other functions of the
government. Elimination of these charges would distort the direct costs and program
revenues reported for the various functions concerned.

Proprietary funds distinguish operating revenues and expenses from non-operating items.
Operating revenues and expenses generally result from providing services and producing
and delivering goods in connection with a proprietary fund’s principal ongoing operations.
The principal operating revenues of the Internal Service Funds are charges to departments
or agencies for sales and services. Operating expenses for Internal Service Funds include
the cost of sales and services, administrative expenses and depreciation on capital assets.
All revenues and expenses not meeting this definition are reported as non-operating
revenues and expenses.

d. Assets, Deferred Outflows, Liabilities, Deferred Inflows and Net Position or Fund Balance

Deposits, Investments, Cash and Cash Equivalents:

The City’s cash and cash equivalents are considered to be cash on hand, demand deposits
and short-term investments with original maturities of three months or less from the date
of acquisition.

Investments for the City, as well as for its component units, are reported at fair value except
for investment contracts that are reported at cost because they are not transferable and
they have terms that are not affected by changes in market interest rates. The City’s policy
is generally to hold investments until maturity or until fair values equal or exceed cost. The
State Treasurer’s Investment Pool operates in accordance with appropriate state laws and
regulations. The reported value of the pool is the same as the fair value of the pool shares.

Receivables and Payables:

Activity between funds that are representative of lending/borrowing arrangements
outstanding at the end of the fiscal year are referred to as either “due to/from other funds”
(i.e., the current portion of interfund loans) or “advances to/from other funds” (i.e., the
non-current portion of interfund loans). All other outstanding balances between funds are
reported as “due to/from other funds.” Any residual balances outstanding between the
governmental activities and business-type activities are reported in the government-wide
financial statements as “internal balances.” All trade and property tax receivables are
shown net of an allowance for uncollectible.

Lease Receivables:

The City is a lessor for leases of land, building, and equipment and recognizes lease
receivables and deferred inflows of resources in the government-wide and governmental
fund financial statements. Variable payments based on future performance or usage of
the underlying asset are not included in the measurement of the lease receivable.

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