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Child Care Resource Center, Inc. Notes to Financial Statements
Note 7 – Debt (continued)
CCRC will make monthly principal and interest payments of $38,422 from October 1, 2017 to September 1, 2032. The mortgage loan payable bears a fixed annual interest rate equal to 3.5% from October 1, 2017 to August 31, 2027, and will be adjusted thereafter based on the five-year treasury maturity rate as set by the Federal Reserve Bank plus 2.5% from September 1, 2027 to September 1, 2032. CCRC is also subject to various affirmative and negative covenants including but not limited to: maintaining average combined non-interest bearing deposit balances of at least $5,000,000, measured monthly; and establishing a “Reserve Fund” with a balance no less than the Reserve Fund Requirement of $892,500. The cash held in reserve for this requirement has been reflected in cash held in reserve in the accompanying statements of financial position at June 30, 2018 and 2017. The loan is secured by the acquired property as well as reserves held with Grandpoint Bank.
Scheduled payments of principal on the mortgage loan for the future years are as follows: Years Ending June 30,
2019 $ 2020
2021
2022
282,864 292,608 303,626 314,572 325,918
3,630,400 5,149,988
2023 Thereafter
Note 8 – Fair Value of Financial Instruments
$
The carrying amounts of cash, receivables, accounts payable, and accrued expenses approximate fair value due to the short maturity of these instruments.
Note 9 – Fair Value of Measurement of Investments
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value hierarchy requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The following three levels of inputs that may be used to measure fair value:
Level 1 – Quoted prices in active markets for identical assets or liabilities.
Level 2 – Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.
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