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6.C. - Page 62 of 124 <br />Redwood City Improvement Association <br />Notes to Financial Statements <br />November 30, 2019 and 2018 <br />Revenue and Revenue Recognition <br />Revenue is recognized when earned. Program service fees and payments under cost -reimbursable contracts <br />received in advance are deferred to the applicable period in which the related services are performed or <br />expenditures are incurred, respectively. Contributions are recognized when cash, securities or other assets, an <br />unconditional promise to give, or notification of a beneficial interest is received. Conditional promises to give <br />are not recognized until the conditions on which they depend have been substantially met. <br />Property and Equipment <br />The Association capitalizes property and equipment purchased or donated with a fair value over $5,000. Lesser <br />amounts are expensed when purchased. Donations of property and equipment are recorded as contributions at <br />their estimated fair value, if known. Such donations are reported as unrestricted contributions unless the donor <br />has restricted the donated asset to a specific purpose. There is no donation of property or equipment in the <br />current year. Routine maintenance and repairs are charged to expense as incurred. Depreciation is computed on <br />the double decline method based on the assets' estimated useful lives ranging from three to ten years. <br />Donated Services, Goods, and Facilities <br />From time to time, there might be a number of volunteers who have donated their time and experience to the <br />Association's program services during the year. However, these donated services are not reflected in the <br />financial statements since there is no readily determined method of valuing the services. <br />Use of Estimates <br />The preparation of financial statements in conformity with generally accepted accounting principles requires the <br />Association to make estimates and assumptions that affect the reported amounts of assets and liabilities at the <br />date of the financial statements and the reported amounts of revenues and expenses during the reporting <br />period. Actual results could differ from those estimates, and those differences could be material. <br />Income Taxes <br />The Association is a nonprofit public benefit corporation that is exempt from income taxes under Section <br />501(c)(3) of the Internal Revenue Code (IRC) and classified by the Internal Revenue Service (IRS) as other than a <br />private organization. Contributions received qualify as tax deductible gifts as provided in Section 170(c)(2). The <br />Association is also exempt from California State franchise and income taxes under Section 23701(d) of the <br />California Revenue and Taxation Code. Accordingly, no provision for income taxes has been reflected in these <br />financial statements. Each entity is annually required to file a Return of Organization Exempt from Income Tax <br />(Form 990) with the IRS. In addition, the Association is subject to income tax on net income that is derived from <br />business activities that are unrelated to their exempt purposes. The Association determined that its entity is not <br />subject to unrelated business income tax and have not filed an Exempt Organization Business Income Tax Return <br />(Form 990-T) with the IRS. <br />W <br />268 <br />