Page 18 - FY 2021-2022 Audited Financial Statements

Child Care Resource Center, Inc. Notes to Financial Statements
Note 2 – Summary of Significant Accounting Policies (continued)
Use of estimates – The preparation of financial statements in conformity with U.S. GAAP 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.
Advertising expenses – All advertising costs are expensed by CCRC as they are incurred.
Recent accounting pronouncements – In February 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2016-02, Leases, which supersedes Accounting Standards Codification (ASC) 840, Leases, and creates a new topic, ASC 842, Leases. This update requires lessees to recognize a lease liability and a lease asset for all leases, including operating leases, with a term greater than 12 months on its statement of financial position. The update also expands the required quantitative and qualitative disclosures surrounding leases. The main difference between previous U.S. GAAP and the amended standard is the recognition of lease assets and lease liabilities by lessees on the statement of financial position for those leases classified as operating leases under previous U.S. GAAP. As a result, CCRC will have to recognize a liability representing its lease payments and a right-of-use asset representing its right to use the underlying asset for the lease term on the statement of financial position. ASU 2016-02 is effective for fiscal years beginning after December 15, 2021. Management is evaluating the effect that this guidance will have on the financial statements and related disclosures.
Recent adopted accounting pronouncements – In September 2020, the FASB issued ASU No. 2020- 07, Not-for-Profit Entities (Topic 958): Presentation and Disclosures by Not-for-Profit Entities for Contributed Nonfinancial Assets. The ASU is intended to improve transparency in the reporting of contributed nonfinancial assets (also known as gifts-in-kind) received by not-for-profit organizations, including transparency on how those assets are used and how they are valued. CCRC adopted the new guidance effective in the current fiscal year and has updated disclosures and presentation as necessary.
Note 3 – Concentration of Credit Risk
Financial instruments that potentially subject CCRC to concentrations of credit risk consist of cash and cash equivalents, cash held in reserve, government contracts receivable, other receivables, and investments. Although cash and cash equivalent balances may from time to time exceed federally insured limits, management believes CCRC is not exposed to any significant credit risk with respect to those deposits. Management believes that CCRC is not exposed to any significant credit risk on government contract and other receivables based on the creditworthiness of the counterparties. Investments are exposed to various risk factors such as market and credit risks. Although the investment value may from time to time change based on the performance of the investments, management believes CCRC is not exposed to any significant credit risk with respect to these investments.
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