Music Library Association: Notes to Financial Statements
June 30, 2003 And 2002
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION -- The Music Library Association was formed in 1945 as a non-stock, non-profit corporation. The purposes of the Association are to promote the establishment, growth, and use of music libraries; to encourage the collection of music and musical literature in libraries; to further studies in musical bibliography; to increase efficiency in music library service and administration; and to promote the profession of music librarianship.
BASIS OF ACCOUNTING -- The Association's policy is to prepare its financial statements on the accrual basis of accounting. Revenues are recognized in the period in which they are earned. Expenses are recognized in the period in which the related liability is incurred.
The financial statements have been prepared in accordance with Statement of Financial Accounting Standards (SFAS) No. 116, Accounting for Contributions Received and Contributions Made. Under SFAS No. 116, contributions received are recorded as unrestricted, temporarily restricted, or permanently restricted support depending on the existence and/or nature of any donor restrictions.
The financial statements have been prepared in accordance with Statement of Financial Accounting Standards (SFAS) No. 117, Financial Statements of Not-for-Profit Organizations. Under SFAS No. 117, the Association is required to report information regarding its financial position and activities according to three classes of net assets: unrestricted net assets, temporarily restricted net assets, and permanently restricted net assets. In addition, the Association is required to present a Statement of Cash Flows.
ACCOUNTS RECEIVABLE -- The Board is of the opinion that all of the Association's accounts receivable are fully collectable and no allowance for doubtful accounts is required.
INVESTMENTS IN MARKETABLE SECURITIES -- Investments in marketable securities are reported at fair value based on quoted market prices.
SUPPORT AND REVENUE -- Support and revenue are reported as increases in unrestricted net assets unless use of the related assets is limited by donor-imposed restrictions. Expenses are reported as decreases in unrestricted net assets. Interest, dividends, gains and losses on investments are reported as increases or decreases in unrestricted net assets unless their use is restricted by explicit donor stipulation. Expirations of temporary restrictions on net assets are reported as reclassifications between the applicable classes of net assets. Contributions are recognized as revenue in the period that the contribution is received.
DONATED MATERIALS AND SERVICES -- Voluntary services and materials donated by individuals and institutions have not been reflected in the financial statements. The impact of those services upon the financial statements is unknown as there is no objective basis available to measure the value of such services.
PROPERTY AND EQUIPMENT -- Property and equipment are stated at cost. The cost of repairs and maintenance is charged to operations as incurred. Major renewals, betterments, and additions are capitalized. When assets are sold or otherwise disposed of, the cost of the asset and related accumulated depreciation are removed from the accounts and the resulting gain or loss is credited or charged to income.
Depreciation is computed using the following method over the estimated useful lives of the assets:
Class Method Computer Equipment Straight--Line
INCOME TAXES -- The Association is exempt from Federal and State income taxes under Internal Revenue Code Section 501(c)(3). Therefore, no provisions have been made for income taxes in the financial statements.
STATEMENTS OF CASH FLOWS -- For the purpose of these statements, the Association considers all highly liquid investments available for current use to be cash equivalents. …