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

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

Investments:

Investments of other enterprise funds and the pension trust fund are stated at cost, adjusted for amorti-
zation of premiums and accretion of discounts, plus accrued income. Short term investments aggregating
$98,610,000 (which approximates market) at June 30, 1981, consisting principally of U. S. Government Se-
curities purchased with agreements to resell, are reported as cash and short term investments in other en-
terprise 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. Short-term investments aggregating $32,566,000
(which approximates market) at June 30, 1981, which consist of U. S. Treasury Bills and commercial paper,
are reported as cash and short term investments. Other investments of the State Accident Fund which are
held for trading purposes and are not intended to be held until maturity are stated at market. Realized gains
and losses from the sale of other investments are credited or charged to income. Changes in unrealized mar-
ket appreciation or depreciation are credited or charged to fund equity. Unrealized market appreciation or
depreciation on other investments is reflected as a reservation of fund equity.

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 of approximately $51,700,000 incurred
during the period of development and construction.

The cost of property, plant and equipment used in the administration of Economic Development activi-
ties and the Lottery is charged to operations in the period acquired. Such amounts are not material.

Depreciation of the cost of property, plant and equipment of the State Use Industries and Maryland
Food Center Authority is provided on the straight-line basis over estimated useful lives of 40 to 50 years for
depreciable real property, 5 to 10 years for building improvements and 3 to 10 years for equipment. Expendi-
tures for repairs and maintenance are charged to operations in the period incurred. Expenditures for addi-
tions 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 in relation to the combined other enterprise funds. Expenditures for repairs
and maintenance are charged to operations in the period incurred. Expenditures for additions and better-
ments 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.

Provisions for Insurance and Loan Losses:

Current provisions are made for estimated losses resulting from insurance of loans and uncollectible
loans. LOSS provisions are based on the current status of insured and direct loans, including delinquencies,
economic conditions, loss experience, estimated value of collateral and other factors which may affect their
realization.

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