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Redwood City Improvement Association Notes to Financial Statements 7 increases in net assets with donor restrictions if they are received with donor stipulations that limit the use of the donated assets. When a donor restriction expires, that is, when a stipulated time restriction ends or purpose restriction is accomplished, net assets with donor restrictions are reclassified to net assets without donor restrictions and reported in the statements of activities as net assets released from restrictions. At November 30, 2024 and 2023, the Association has only net assets classified as net assets without donor restrictions and are held for Redwood Downtown from the City of Redwood City. Revenue and Revenue Recognition Revenue is recognized when earned. Program service fees and payments under cost ‐reimbursable contracts received in advance are deferred to the applicable period in which the related services are performed or expenditures are incurred, respectively. Contributions are recognized when cash, securities or other assets, an unconditional promise to give, or notification of a beneficial interest is received. Conditional promises to give are not recognized until the conditions on which they depend have been substantially met. Property and Equipment The Association capitalizes property and equipment purchased or donated with a fair value over $5,000. Lesser amounts are expensed when purchased. Donations of property and equipment are recorded as contributions at their estimated fair value, if known. Such donations are reported as unrestricted contributions unless the donor has restricted the donated asset to a specific purpose. There is no donation of property or equipment in the current year. Routine maintenance and repairs are charged to expense as incurred. Depreciation is computed on the double decline method based on the assets' estimated useful lives ranging from three to ten years. Donated Services, Goods, and Facilities From time to time, there might be a number of volunteers who have donated their time and experience to the Association's program services during the year. However, these donated services are not reflected in the financial statements since there is no readily determined method of valuing the services. Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires the Association to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates, and those differences could be material. 8.A. - Page 29 of 33 41