Notes to the Financial Statements
December 31, 2000
- Purpose and Income Tax Status
SpringTime was incorporated under the Societies Act of Alberta to administer the annual Spring Fling event in SpringField, Alberta. SpringField is a non-profit organization and is therefore exempt from paying income taxes under the Income Tax Act.
- Significant Accounting Policies
SpringTime follows the deferral method of accounting for contributions.
Restricted contributions for the Spring Fling are recognized when Spring Fling expenses are incurred. Unrestricted contributions are recognized when received or when receivable if the amount to be received can be reasonably estimated and collection is reasonably assured. Endowment contributions are recognized as direct increases in net assets. Investment income restricted to Spring Fling expenses is recognized when Spring Fling expenses are incurred. Investment income to be added to endowments is recognized as a direct increase in net assets. Unrestricted investment income is recognized when earned.
Purchased capital assets are recorded at cost and donated capital assets are recorded at their fair value at the time of contribution. Furniture and equipment are amortized on a straight line basis over ten years.
Inventory is valued at the lower of cost and net realizable value.
SpringTime’s volunteers contribute about 300 hours per year to the Spring Fling and related activities. Contributed services are not recognized in the financial statements because of the difficulty in determining their fair value
SpringTime’s endowment funds have been invested in a Government of Canada bond, maturing June 30, 2010, bearing an interest rate of 5%. The bond is recorded on these financial statements at cost of $10,190. The market value of this bond at December 31, 2000 was $10,000. Management has not adjusted the value of the bond to market value, as bond prices are likely to increase in the next few years according to the predictions of leading market analysts.
- Capital Assets
Capital assets at December 31 consisted of the following:
Cost AccumulatedAmortization NetBook Value 2000 1999 2000 1999 2000 1999 Furniture and equipment $2,200 $2,000 (910) (800) $1,290 $1,200
- Bank Loan Payable
The bank loan is repayable at the rate of $100 per year for each of the next five years, and bears an interest rate of 10%.
- Deferred Contributions
Deferred contributions relate to the annual Spring Fling program and capital assets donated or purchased with externally restricted contributions. Spring Fling contributions are recognized when the expenses on the program are made. Capital contributions are recognized when the assets donated or purchased with restricted contributions are amortized. Changes in deferred contributions for the Spring Fling program are as follows:
2000 1999 Balance, at beginning of year $200 $500 Revenue recognized in the year (200) (500) Contributions received 300 200 Endowment interest 115 - Balance, at end of year $415 $200
Changes in deferred capital contributions are as follows:
2000 1999 Balance, at beginning of year $400 $450 Revenue recognized in the year (60) (50) Contribution of assets 200 - Contribution for debt on assets 100 - Balance, at end of year $640 $400
Totals for the year:
2000 1999 Deferred Spring Fling contributions $415 $200 Deferred capital contributions 640 400 $1,055 $600
SpringTime’s financial instruments consist of cash, accounts receivable, a Government of Canada bond, a bank loan, and accounts payable. It is management’s opinion that SpringTime is not exposed to significant interest or credit risks arising from these financial assets and liabilities. The fair values of these financial assets and liabilities approximate their carrying values, except where otherwise noted