NOTES TO FINANCIAL STATEMENTS

NOTE 8. LONG-TERM DEBT (CONTINUED)

Capital Leases. During the year ended July 31, 2015, the City entered into lease-purchase agreements with the Georgia Municipal Association for the purchase of vehicles in the amount of $388,760 for the public safety and public works departments. The lease agreements qualify as capital leases for accounting purposes (title transfers at the end of the lease term) and have been recorded at the present value of the future minimum lease payments as of the date of their inception. The vehicle leases are being serviced by Building Fund payments with annual interest rates of 2.26%. During the year ended July 31, 2016, the City entered into a lease-purchase agreement with the Georgia Municipal Association for the purchase of a vehicle in the amount of $768,055 for the public safety department. The lease agreements qualify as capital leases for accounting purposes (title transfers at the end of the lease term) and have been recorded at the present value of the future minimum lease payments as of the date of their inception. The vehicle leases are being serviced by Building Fund payments with annual interest rates of 2.54%.

The City reported accumulated depreciation and depreciation expense in the respective amounts of $197,180 and $148,157 on the above leased assets as of July 31, 2016.

The following is a schedule of future minimum lease payments under the capital leases and the present value of the net minimum lease payments at July 31, 2016: