Notes to Financial Statements
Note 2: Summary of significant accounting policies
The financial statements of the College have been prepared in accordance with Canadian generally accepted accounting principles.
Revenue recognition
The College follows the deferral method of accounting for revenues. Restricted revenues are deferred and then recognized as revenue in the year in which the related expense is incurred.
Financial contributions received by the College from third parties for capital asset purchases are deferred and recognized in revenue on the same basis as the amortization of the capital assets acquired. Membership fees received in advance are deferred and recognized as revenue in the year to which the fee relates.
Unrestricted revenues are recognized as revenue when received or receivable, if the amounts to be received can be reasonably estimated and collection is reasonably assured.
Investments
Investments include $3,375,997, which is currently restricted for use in building improvements. Investments are recorded at fair value and include accrued interest.
Capital assets
Capital assets are recorded at cost and are amortized on a straight-line basis over their estimated useful lives, as follows:
| Computer equipment | 3 years |
| Furniture and office equipment | 10 years |
| Building improvements | 15 years |
| Building | 30 years |
Deferred lease inducements
The College amortizes lease inducements over the term of the lease and nets the amortization against rent expense.
Financial instruments
Cash and short-term investments are classified as held-for-trading and are recorded at fair value. Accounts receivable are classified as loans and receivables and accounts payable and accrued liabilities are classified as other financial liabilities, which are both recorded at cost. This approximates fair value due to the short-term nature of the balances. The mortgage payable is recorded at amortized cost.
Unless otherwise noted, it is management’s opinion that the College is not exposed to significant interest, currency or credit risk arising from these financial statements.
Income taxes
As a not-for-profit professional membership organization, the College is not liable for income taxes.
Use of estimates
The preparation of financial statements in conformity with Canadian generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of revenue and expenses during the reporting period. For all estimates, actual results could differ from those estimates.
Future accounting changes
Accounting standards for not-for-profit organization
In December 2010, the Canadian Accounting Standards Board issued a comprehensive set of accounting standards applicable to not-for-profit organizations. The standards are effective for fiscal years beginning on or after January 1, 2012 and require retrospective application, except for certain exemptions and exceptions contained within the standards. Early adoption of the standards is permitted. The College is currently considering the impact of the adoption of these standards.