Page 65 - 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 City uses the interest rate charged by the vendor as the discount rate. When the
interest rate charged by the vendor is not provided, the City generally uses its estimated
incremental borrowing rate as the discount rate for SBITA.

• The SBITA term includes the noncancellable period of the SBITA. SBITA payments
included in the measurement of the SBITA liability are composed of fixed payments
and purchase option price that the City is reasonably certain to exercise.

The City monitors changes in circumstances that would require a remeasurement of its
SBITA and will remeasure any SBITA asset and liability if certain changes occur that are
expected to significantly affect the amount of the SBITA liability.

Long-term Obligations:

In the government-wide financial statements, and proprietary and fiduciary fund types in
the fund financial statements, long-term debt and other long-term obligations are reported
as liabilities. Bond premiums and discounts are deferred and amortized over the life of
the bonds using the effective interest method. Bonds payable are reported net of the
applicable bond premium or discount. Issuance costs, whether or not withheld from the
actual debt proceeds received, are reported as debt service expenditures.

In the fund financial statements, governmental fund types recognize bond premiums and
discounts during the current period. The face amount of debt issued is reported as other
financing sources. Premiums received on debt issuances are reported as other financing
sources while discounts on debt issuances are reported as other financing uses. Issuance
costs, whether or not withheld from the actual debt proceeds received, are reported as
debt service expenditures.

Land Held for Resale:

Land purchased for the purposes of resale is recorded at cost or, if lower, the estimated
net realizable value upon entering into an agreement to sell the property.

Fund Balance:

In the governmental fund financial statements, fund balances are classified as follows:

Nonspendable include amounts that cannot be spent because they are either (a) not in
spendable form or (b) legally or contractually required to be maintained intact.

Restricted include amounts that are constrained on the use of resources by either (a)
external creditors, grantors, contributors, or laws or regulations of other governments, or
(b) by law through constitutional provisions or enabling legislation.

Committed include amounts that can only be used for specific purposes pursuant to
constraints imposed by formal action of the government’s highest authority, City Council.
The formal action that is required to be taken to establish, modify, or rescind a fund balance
commitment is a resolution by the City Council.

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