AgdaPkt 2020-07-13 Special Joint SA PFA

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6.C. - Page 37 of 124 REDWOOD CITY IMPROVEMENT ASSOCIATION (A California Nonprofit Corporation) NOTES TO FINANCIAL STATEMENTS NOVEMBER 30, 2018 AND 2017 Accounting Standard Update (ASU) On August 18, 2016, the FASB completed Phase I of its Presentation of Financial Statements of Not -for -Profit Entities project by issuing ASU No. 2016-14, Not -for -Profit Entities (Topic 958): Presentation of Financial Statements of Not -for -Profit Entities. The new guidance simplifies and improves how not-for-profit entities classify net assets as well as the information presented in financial statements and notes about liquidity, financial performance, and cash flows. The amendments in the standard are effective for annual financial statements issued for fiscal years beginning after December 15, 2017. Early application of the amendments in this Update is permitted. NOTE 2 - MARKET VALUE OF FINANCIAL ASSETS AND LIABILITIES The Association determines the fair market values of certain financial instruments based on the fair value hierarchy established in FASB ASC 820-10-50, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The standard describes three levels of inputs that may be used to measure fair value. The following provides a summary of the hierarchical levels used to measure fair value: Level 1 - Quoted prices in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date. Level 2 - Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Level 3 - Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. The Association did not have any assets or liabilities recorded at fair value as of November 30, 2018. NOTE 3 - PROPER TYAND EQUIPMENT Property and equipment at November 30, 2018 had a total cost of $393,758 and consisted mainly of projectors, LED tree lights, and digital lighting equipment. Depreciation expense for the year ended November 30, 2018, was $77,099. NOTE 4 - NET ASSETS At November 30, 2018, unrestricted net assets consisted of program funds held for beautifying Redwood Downtown from City of Redwood City. 243