Executive Vice President - 2006/12

December 2006 175
THIS MONTH I will continue with the
Notes to Financial Statements.
As I previously stated, the information
presented is a portion of the information
used by accountants attempting to determine
the balances of designated items.
By the time you read this you will know
about AMA’s new executive director who
was elected in October at the Executive
Council meeting. At this same meeting, a
budget for the 2007 year was adopted.
Thought for the day: The best way to
succeed in life is to act on the advice we give
to others.
A-B-C—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 - continued
Inventory - The Academy values its merchandise inventory at cost on a first-in, first-out basis.
Investments - The Academy has adopted SFAS No. 124, Accounting for Certain Investments Held by Not-For-
Profit Organizations. In accordance with this statement, investments in equity securities with readily determinable
fair values and all investments in debt securities are measured at fair value in the statement of financial position.
Unrealized gains of $163,245 and $20,084 have been included as a component of other revenue (expenses) -
net, in the accompanying statements of activities for the years ended December 31, 2005 and 2004,
respectively.
Unrealized gains and losses on investments are reported in the statement of activities as increases or decreases
in unrestricted net assets unless their use is temporarily or permanently restricted by explicit donor stipulations or
by law.
Competition Funds - The Academy sponsors several types of national and international flying competitions,
which have funds maintained by the Academy, but under the control of the appropriate team selection
committee. The funds are generated by the entry fees of program participation, donations and other sources.
The total of these funds are reflected as a current liability in the accompanying statements of financial position at
December 31, 2005 and 2004.
Advertising Expense - The advertising and promotional costs of the Marketing Division are expensed as
incurred. Total advertising and promotional costs, excluding those direct production costs related to the sale of
magazine advertising space, were $594,024 and $416,769 for the years ended December 31, 2005 and 2004,
respectively.
Museum Collection - The Academy does not capitalize its museum collection held for public exhibition and
education. The Academy’s policy requires the collection to be protected, unencumbered, preserved and the
proceeds from sales of collection items used to acquire other items for the collection. Contributed collection items
or gains from the sale of collection items are not recognized as revenue. The Academy has insured its collection
for $994,033, which management estimates is approximately its replacement cost.
Goodwill - The Academy purchased the interest title, customer and exhibitor lists, and rights to the International
Modelers Show (IMS). IMS is a trade show held annually in Pasadena, California. The Academy has recorded
the $100,000 purchase as goodwill.
The Academy has elected to amortize the goodwill on a straight-line basis over fifteen years. Amortization of
intangible assets differs from the asset impairment recognition required by accounting principles generally
accepted in the United States of America. Management believes the effect of this departure is immaterial to the
financial statements taken as a whole. Amortization expense was $6,667 for the years ended December 31,
2005 and 2004.
Reclassifications - Certain amounts in the 2004 financial statements have been reclassified to conform to the
2005 financial statement presentation.