Page 63 - 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)

The costs of normal maintenance and repairs that do not add to the value of the asset or
materially extend assets lives are not capitalized.

Major outlays for capital assets and improvements are capitalized as projects are
constructed.

Property, plant and equipment are depreciated using the straight-line method over the
following estimated useful lives:

Assets Years
Buildings and Improvements 5 - 50
Furniture and Equipment 3 - 15
Vehicles 3 - 10
Infrastructure 20 - 50

Deferred Outflows and Inflows of Resources:

In accordance with GAAP, the City recognizes deferred outflows and inflows of resources.
A deferred outflow of resources represents a consumption of net assets that applies to
future periods. A deferred inflow of resources represents an acquisition of net assets that
applies to future periods. Refer to Note 8 and Note 9 for the list of deferred outflows and
deferred inflows of resources related to Pension and OPEB of the City, recognized as of
June 30, 2025.

Deferred inflows of resources related to rental revenues from leased assets under GASB
Statement No. 87 are reported in the balance sheet of governmental fund financial
statements. These amounts are deferred and recognized as an inflow of resources until
amortized.

Unearned Revenue:

The City reports unearned revenue in the fund-level statements and in the statement of
net position. Unearned revenue arises when the City receives resources before it has a
legal claim to them, as when grant monies are received prior to the incurrence of qualifying
expenditures.
Unfunded liabilities:

The City accounts for the accumulation of cash reserves to provide for payment of
future unfunded liabilities, such as those associated with employee benefits like Pension,
OPEB, and Compensated Absences, attributable to services already rendered. It is the
government’s policy to permit employees to accumulate earned but unused annual leave
benefits. The City records the annual leave liability using benefits earned by employees at
the balance sheet date that will result in termination payments rather than compensated
absences. The City records the annual leave liability using the dollar value of employees’
rights to receive compensation attributable to services already rendered.

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