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<br /> <br /> <br /> <br /> <br /> <br /> <br /> American Red Cross, Lamar County Chapter <br /> Notes to the Cash Basis Financial Statements <br /> For the Year Ended June 30, 2009 <br /> <br /> <br /> NOTE I - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES <br /> <br /> Basis of Accounting <br /> <br /> The accompanying financial statements have been prepared on the cash basis of <br /> accounting, which is a comprehensive basis of accounting other than generally accepted <br /> accounting principles. Consequently, contributions and other revenges are recognized <br /> when received rather than when promised or earned, and certain expenses and purchases <br /> of assets are recognized when cash is disbursed rather than when the obligation is <br /> incurred. The only asset recognized is cash, and no liabilities are recognized. Noncash <br /> transactions are not recognized in the financial statement. <br /> <br /> Income Taxes <br /> <br /> The organization itself is not a taxpaying entity for purposes of federal and state income <br /> taxes. Instead, its financial activity is reported as part of the American Red Cross federal <br /> reporting as a non-profit organization exempt from federal income tax under Section <br /> 501(c)(3). <br /> <br /> Land. Buildings, and Equipment Fixed Assets) <br /> <br /> Asset acquisitions have been expensed when purchased as a non-operating expense and <br /> are recorded oil the financial statements. However, for fixed assets, such as land, <br /> buildings, vehicles, office and equipment, records are maintained and depreciated (except <br /> for land) by the chapter in accordance with procedures and policies of American Red <br /> Cross. The American Red Cross requires the calculation of depreciation on fixed tangible <br /> assets with a unit cost or donated value of $2,500 or more and an estimated useful life of <br /> three or more years. Records are retained by the chapter for all frilly depreciated fixed <br /> assets until they are no longer in use and have been salvaged or sold. It is the chapter's <br /> policy to depreciate its equipment at lives ranging from three to ten years. <br /> <br /> Financial Statement Presentation <br /> Non-profit organizations report net assets according to three classes of net assets: <br /> unrestricted net assets, temporarily restricted net assets, and permanently restricted net <br /> assets. Therefore, the net assets of the chapter and changes therein are classified and <br /> reported as follows: <br /> <br /> Unrestricted Net Assets are net assets that are not subject to donor-imposed stipulations. <br /> <br /> <br /> <br /> <br /> <br /> 00'74 <br />