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Child Care Resource Center, Inc. Notes to Financial Statements
Note 2 – Summary of Significant Accounting Policies (continued)
In-kind contributions – Donated office space, donated equipment, and other donated goods and services are recorded at their estimated fair value as of the date of the donation if the fair value exceeds $1,000. CCRC received professional services relating to the Head Start Program valued at $86,978 and $76,299 for the years ended June 30, 2017 and 2016, respectively.
Functional expenses – The costs of providing the various programs and other activities have been summarized on a functional basis. Accordingly, certain costs have been allocated among the programs and supporting services benefited. Fundraising costs of $201,639 and $91,390 for the years ended June 30, 2017 and 2016, respectively, were not charged to any child development contracts.
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 has determined no uncertain tax benefits or liabilities exist at June 30, 2017 and 2016.
Use of estimates – The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America 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 revenue and expenses during the reporting period. Actual results could differ from those estimates.
Environmental regulation – Substantially all of CCRC’s facilities are subject to federal, state, and local provisions regulating the discharge of materials into the environment. Compliance with these provisions has not had, nor does CCRC expect such compliance to have any material effect upon the capital expenditures, change in net assets, or financial condition of CCRC. Management believes that its current practices and procedures for the control and disposition of such waste comply with applicable federal and state requirements.
New accounting pronouncement – The June 30, 2017 financial statements reflect adoption of the Financial Accounting Standards Board (“FASB”) Accounting Standards Update (“ASU”) No. 2014-15, Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern. ASU 2014-15 defines management’s responsibility to evaluate whether there is a substantial doubt about an organization’s ability to continue as a going concern and to provide related footnote disclosures. CCRC adopted this ASU and concluded there is not substantial doubt of its continued operations.
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