30, 1980, consisting principally of U. S. Government Securities and U. S. Government Securities purchased
with agreements to resell, are reported as cash and short term investments in governmental fund types.

Capital Outlays:

Principally all capital expenditures for the acquisition or construction of State general fixed assets and
State grants to political subdivisions and other public organizations for the acquisition or construction of
capital facilities are reported as capital outlays in capital projects fund. Approximately $149 million is in-
cluded in capital outlays for the year ended June 30, 1980 which is attributable to State grants to political
subdivisions and other public organizations.

Expendable Trust Fund Balances:

Fund balances of expendable trust funds are restricted to the purpose of the fund and are reported as
fund balance reserves.

C. Other Enterprise Funds and Nonexpendable and Pension Trust Funds:
Basis of Accounting:

The accounts of the other enterprise funds, nonexpendable trust funds and pension trust funds are main-
tained and reported using the accrual basis of accounting.

Investments:

Investments of other enterprise funds and pension trust funds are stated at cost, adjusted for amortiza-
tion of premiums and accretion of discounts, plus accrued income. Such basis approximates market for the
other enterprise funds. The market value of investments held in the pension trust funds approximates
$2,312,902,000 in relation to adjusted cost of approximately $2,421,843,000. Short term investments aggre-
gating $6,073,000 at June 30, 1980, consisting principally of U. S. Government Securities purchased with
agreements to resell, are reported as cash and short term investments in other enterprise funds.

Short term investments of the State Accident Fund are stated at cost, adjusted for amortization of pre-
mium and accretion of discount, plus accrued income. Such basis approximates market. Short-term invest-
ments aggregating $22,379,718 at June 30, 1980, which consist of U. S. Treasury Bills and commercial pa-
per, are reported as cash and short term investments. Other investments of the State Accident Fund are
stated at market. Realized gains and losses from the sale of other investments are credited or charged to in-
come. Changes in unrealized market appreciation or depreciation are credited or charged to fund equity. Un-
realized market appreciation or depreciation on other investments is reflected as a reservation of fund eq-
uity.

Property, Plant and Equipment:

Significant property, plant and equipment of other enterprise funds are stated at cost, including, with
respect to the Maryland Transportation Authority, financing costs in the amount of $51,702,297 incurred
during the period of development and construction. The cost of property, plant and equipment used in the ad-
ministration of Economic Development activities and the Lottery is charged to operations in the period ac-
quired. Such amounts are not material.

Depreciation of the cost of property, plant and equipment of the State Use Industries, Maryland Food
Center Authority and the Ocean City Convention Hall Commission is provided on the straight-line basis
over estimated useful lives of 40 to 50 years for depreciable real property and 3 to 10 years for equipment.
Expenditures for repairs and maintenance are charged to operations in the period incurred. Expenditures for
additions and betterments are capitalized.

The cost of toll facilities is not depreciated. Expenditures for repairs, maintenance and replacements are
charged to operations in the period incurred. Expenditures for additions and betterments are capitalized.

The cost of property, plant and equipment of the Maryland Environmental Service is not depreciated
and such amount is not material. Expenditures for repairs and maintenance are charged to operations in
the period incurred. Expenditures for additions and betterments are capitalized.

Lottery Revenues and Prizes:

Revenues and prizes of the State Lottery are generally recognized as drawings are held. Certain prizes
are payable in deferred installments. Such liabilities are recorded at the present value of amounts payable
in the future.

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