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CATHOLIC CHARITIES OF THE DIOCESE OF PALM BEACH, INC. 1 NOTES TO FINANCIAL STATEMENTS June 30, 2002 and 2001 I I NOTE A - SIGNIFICANT ACCOUNTING POLICIES (Continued) f are expendable only for the operating purposes specified by the donor. There are no permanently restricted assets. Under certain federal grant awards, the Organization may have to return the equipment purchased with such awards to the federal government should the Organization terminate the program. Accounting Estimates : The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of public support and revenue and expenses during t the reporting period. Actual results could differ from those estimates. r Cash and Cash Equivalents: The Organization considers all highly liquid investments purchased with a maturity of three months or less to be cash equivalents. The Organization maintains its cash in bank deposit accounts, which at times may exceed federally insured limits. The Organization has not experienced any losses in such accounts, and it is management's belief that the Organization is not exposed to any significant credit risk on its cash and cash equivalents due to the high credit standing of the financial institutions where the Organization's funds are deposited. The amount of cash and cash equivalents that was in excess of federally insured limits was $60,800 and $103,900 at June 30, 2002 and 2001, respectively. t Property and Equipment: Property and equipment is stated at cost (donated property or equipment is recorded at its estimate fair value) and is depreciated and amortized using the straight-line method over the following estimated useful lives: Years l .. Furniture and equipment 5 Vehicles 5 Building improvements 15 Maintenance and repairs that are not expected to extend the life of an asset beyond its normal useful life y are expensed as incurred. Property costing greater than $500 as generally capitalized. Certain assets have been acquired under government contracts . At the end of the contract, these assets are available for return to the government funding sources. 1 i Investments: The Organization records its investments in equity securities with readily determinable fair values and all investments in debt securities at fair value with realized and unrealized gains and Iosses included in the statement of activities. ( . Revenue Recognition: The Organization receives various grants from federal, local, and private agencies i for program and supporting service expenses. These grants are generally on a cost reimbursement basis, including recoverable overhead. Revenues from grants are deemed earned and recognized in the statements of activities when expenditures are made for the purpose specified. Funds that have been t received but have not yet been expended for the purpose specified are reported as temporarily restricted revenue or deferred revenue as applicable. 12 r