November 2006 161
AMA HAS
PRESENTED
financial statements
and supporting
schedules giving you
an overall view of the
accounting information
for 2005 compared
with 2004. During the
next few months,
AMA will present the Notes to Financial Statements. Each note is
self explanatory and provides information used by auditors in
making decisions regarding opinions and other issues during the
audit.
The audit report is available on the AMA Web site in the
Members Only section.
Should you have additional questions regarding the information
presented, please contact me.
Sometimes you are destined to succeed, but most people succeed
because they are determined to succeed.
ABC: Always Be Courteous.
Until later …
Doug Holland
3517 Fernwood Dr.
Raleigh NC 27612
Home: (919) 878-5163
Work: (919) 787-7454
Executive Vice President
Doug Holland; [email protected]
THE ACADEMY OF MODEL AERONAUTICS, INC.
NOTES TO FINANCIAL STATEMENTS
NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The Academy of Model Aeronautics, Inc. (the “Academy”) was incorporated in 1966 under the laws of the District
of Columbia. The Academy’s primary objective is to promote the educational and scientific aspects of model aviation.
Accounting Methods - The Academy maintains its accounts on the accrual basis of accounting and accordingly
reflects all significant receivables, payables and other liabilities.
Basis of Accounting - The Academy’s financial statement presentation follows the recommendations of the
Financial Accounting Standards Board in its Statement of Financial Accounting Standards (SFAS) No. 117, Financial
Statements of Not-For-Profit Organizations. Under SFAS No. 117, the Academy reports information regarding its
financial position and activities according to three classes of net assets: unrestricted net assets, temporarily
restricted net assets, and permanently restricted net assets. The Academy has no permanently restricted net assets.
Financial 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, disclosure of contingent assets and liabilities at the date of the financial
statements, and the reported amounts of income and expenses during the reporting period. Actual results could
differ from those estimates.
Membership Revenue - Memberships are sold on a calendar year basis and revenue is recognized when earned
except for life memberships, which are recognized when sold.
Concentration of Credit Risk - Financial instruments that potentially subject the Academy to credit risk consist
principally of advertising receivables. In addition, the Academy had funds on deposit with a financial institution in
excess of the $100,000 federally insured limit at December 31, 2005 and 2004. The Academy maintains its primary
banking and financing relationships with one financial institution.
Property and Equipment- Land, buildings and improvements, and equipment are carried at cost. Expenditures for
improvements and replacements are added to the property and equipment accounts. Repairs and maintenance are
charged to expense as incurred.
Depreciation is provided over the estimated useful lives of the assets using the straight-line method.
Cash Equivalents - The Academy considers all liquid investments with original maturities of three months or less to
be cash equivalents.
Income Taxes - The Academy operates as a nonprofit organization and has received exempt status under Section
501(c)(3) of the Internal Revenue Code. The Academy is, however, subject to unrelated business income tax on
magazine advertising, merchandise sales and rental income from debt financed property. There was no unrelated
business income tax expense for the years ended December 31, 2005 and 2004.
Allowance for Doubtful Accounts - The Academy uses the allowance method of accounting to record uncollectible
accounts. An allowance is made for possible losses on collection of accounts based on periodic reviews of credit
risks. When accounts are determined to be uncollectible, they are charged off against the allowance. Management
deems an account to be uncollectible when all collection efforts have failed or their customer is bankrupt. The
allowance for doubtful accounts was $3,000 for the years ended December 31, 2005 and 2004.
Edition: Model Aviation - 2006/11
Page Numbers: 161