04.07 Consider BLADC's 2002 & 2003 Audit

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BRAINERD LAKES AREA DEVELOPMENT CORPORATION NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30,2003 AND 2002 NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Nature of Operations The Organization provides guidance and assistance for business development in the Brainerd Lakes Area. The Organization's primary sources of revenue are support contracts with local governments and membership fees. Revenue Recognition The Organization receives substantially all of its support and revenue from contracts with local government units,which are generally based on a calendar year. The Organization recognizes this support and revenue on a pro-rata basis over the term of the contract. Individual and corporate membership dues are recognized as revenue when received. Beginning in 1996, the Organization established a Patron membership category. Patron membership dues are$1,000 annually,for a peeiod of five years and are recognized as revenue when received. Deferred revenue represents local government support contracts which have not been earned as of the fiscal year end. Donated Services. Goods and Capital Assets Significant donated services, goods and capital assets received during the year are recorded as revenue and offset by an equal charge to expense or property and equipment, as appropriate. This is done to recognize the value of such services, goods and assets and the related cost to the Organization in order to provide users of the financial statements with an accurate reflection of operational activity. The donated items are recorded at their fair market value. (See Note 7). Property and Equipment Property and equipment are stated at cost. Expenditures for major renewals and betterments that extend the useful lives of property and equipment are capitalized. Expenditures for maintenance and repairs are charged to expense as incurred. Depreciation is computed using the straight-line method and amounted to$3,867 for the year ended September 30,2003 and $3,014 for the year ended September 30,2002. Financial Statement Presentation The Organization prepares its financial statements in accordance with Statement of Financial Accounting Standards (SFAS)No. 117, "Financial Statements of Not-for-Profit Organizations". Under SFAS No. 117,the Organization is required to report 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. As of and for the years ended September 30,2003 and 2002,the Organization held no temporarily or permanently restricted net assets. 7