b'City of Dover Tuscarawas County, Ohio Notes to the Basic Financial Statements For the Year Ended December 31, 2018 TheCityintendstorecoverthesecostsandrepayAMPoverthenextfiveyearsthroughapowercost adjustment; thus this incurred cost has been capitalized and reported as a regulated asset. Note 13Capital Lease PayableIn 2016, the City entered into a capital lease for a copier.This lease meets the criteria of a capital lease.The asset was capitalized at the present value of the minimum lease payments at the time the lease was entered into.The asset acquired through the capital lease is as follows:GovernmentalActivitiesMachinery and Equipment$10,856Less:Accumulated Depreciation (1,629)Current Book Value $9,227Such agreement provides for minimum, annual lease payments as follows:GovernmentalYear Ending December 31 Activities2019 $2,4752020 2,4752021 413Total Minimum Lease Payments 5,363Less:Amount Representing Interest (306)Present Value of Minimum Lease Payments $5,057Note 14Contingent LiabilitiesLitigationOn June 20, 2016, the City approved a settlement with the Tuscarawas County Metropolitan Sewer District (TCMSD) to transfer the Lowden, Parral and Willow Glens/Ridgewood collection system, as well as the Ridgewood water system, to the City to operate and maintain.The City had agreed to pay Tuscarawas County $1.32 million for the assets.After discovery of some additional information, this agreement was revoked, and the City and the County continued discussion on the transfer.On December 17, 2018, the City approvedanewsettlement.Thistime,thesettlementinvolvedtheCitypayingnomoneyforboththe collection and water systems.The City is expected to take full ownership of the systems by late 2019.Federal and State GrantsThe City participates in several federally assisted programs.These programs are subject to financial and complianceauditsbythegrantorortheirrepresentative.Suchauditscouldleadtoarequestfor reimbursement to the grantor agency for expenditures disallowed under the terms of the grant.Based on prior experience, the City believes such disallowance, if any, would be immaterial.- 55 56 -'