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CHILD CARE RESOURCE CENTER, INC. (A NONPROFIT ORGANIZATION)
NOTES TO FINANCIAL STATEMENTS June 30, 2015
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Estimated Fair Value of Financial Statements (Continued)
Level2: Includes other inputs that are directly or indirectly observable in the
marketplace
Level 3: Unobservable inputs which are supported by little or no market activity
The fair value hierarchy also requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. For the year ended June 30, 2015 and 2014, the application of valuation techniques applied to similar assets and liabilities has been consistent.
CCRC’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the instrument. The carrying values of government contracts receivable, other current assets, accounts payable and accrued expenses approximate fair values due to the short maturity of these instruments.
In accordance with ASC 820, CCRC classified all its cash and cash equivalents in the Level 1 fair value hierarchy measured at fair value on a recurring basis at June 30, 2015 and 2014.
Income Taxes
CCRC has been designated as tax-exempt under Internal Revenue Code Section 501(c)(3) and is also exempt from state franchise taxes under Section 23701(d) of the California Revenue and Taxation Code and is not generally subject to federal or state income taxes.
However, CCRC is subject to income taxes on any net income that is derived from a trade or business, regularly carried on, and not in furtherance of the purposes for which it was granted exemption. No income tax provision has been recorded as the net income, if any, from any unrelated trade or business and, in the opinion of management, is not material to the basic financial statements taken as a whole.
CCRC also applies the provisions of FASB Accounting Standards Codification Topic No. 740, Accounting for Uncertainty in Income Taxes (“ASC 740”). ASC 740 clarifies the uncertainty in income taxes recognized in an enterprise’s financial statements in accordance with FASB Statement No. 109, Accounting for Income Taxes, and prescribes a recognition and measurement of a tax position taken or expected to be taken in a tax return.
ASC 740 also provides guidance on de-recognition of tax benefits, classification on the balance sheet, interest and penalties, accounting in interim periods, disclosure and transition. CCRC has determined that the adoption of ASC 740 did not result in the recognition of any liability for unrecognized tax benefits and that there are no unrecognized tax benefits that would, if recognized, affect the effective tax rate.
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