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Land is not depreciated. The other capital assets of the Town are depreciated/amortized using the straight line method over the following estimated useful lives: Assets Years Threshold Buildings 40 $ 5,000 Improvements 20 5,000 Machinery and Equipment 3-20 1,000 Right-to-use leased equipment 5-20 5,000 Infastructure 20-50 5,000 The capital outlays character classification is employed only for expenditures reported in the Capital Projects Fund. Routine capital expenditures in the General Fund and other governmental funds are included in the appropriate functional category (for example, the purchase of a new highway vehicle included as part of expenditures—transportation). At times, amounts reported as capital outlays in the Capital Projects Fund will also include non-capitalized, project-related costs (for example, furnishings). Deferred Outflows/Inflows of Resources—In addition to assets, the statement of financial position will sometimes report a separate section for deferred outflows of resources. This separate financial statement element, deferred outflows of resources, represents a consumption of net position that applies to a future period(s) and so will not be recognized as an outflow of resources (expense/ expenditure) until then. At December 31, 2024, the Town has one item that qualifies for reporting in this category. This item represents the effect of the net change in the Town’s proportion of the collective net pension liability/(asset), the difference during the measurement period between the Town’s contributions and its proportionate share of the total contribution to the pension systems not included in the pension expense, and any contributions to the pension systems made subsequent to the measurement date. In addition to liabilities, the statement of financial position will sometimes report a separate section for deferred inflows of resources. This separate financial statement element, deferred inflows of resources, represents an acquisition of net position that applies to a future period(s) and so will not be recognized as an inflow of resources (revenue) until that time. At December 31, 2024, the Town has two items that qualified for reporting in this category. The first item represents the effect of the net change in the Town’s proportion of the collective net pension liability/(asset) and the difference during the measurement periods between the Town’s contributions, and its proportionate share of the total contributions to the pension systems not included in pension expense and is reported on the government-wide statements. The second item is related to leases receivable and reported on the government-wide statements and on the balance sheet of governmental funds, is recognized at the commencement of the Town’s lease receivable and amortized over the life of the lease. Net Position Flow Assumption—Sometimes the Town will fund outlays for a particular purpose from both restricted (e.g., restricted bond or grant proceeds) and unrestricted resources. In order to calculate the amounts to report as restricted–net position and unrestricted–net position in the government-wide financial statements, a flow assumption must be made about the order in which the resources are considered to be applied. It is the Town’s policy to consider restricted-net position to have been depleted before unrestricted-net position is applied. - 22 -