Page 30 - CALEA 2015 Annual Report

For the Year Ended December 31, 2015
N N O OT T E E S S T TO O F F I I N N A A N N C C I I A A L L S S T TA AT T E E M M E E N N T T S S
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
The three levels of the fair value hierarchy are described as follows:
Level 1 – Inputs based on quoted prices (unadjusted) in active markets for identical assets or liabilities accessible at the measurement date.
Level 2 – Inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly, such as quoted prices for similar assets or liabilities in active markets.
Level 3 – Unobservable inputs for the asset or liability, including the reporting entity’s own assumptions in determining the fair value measurement.
As of December 31, 2015, only CALEA’s investments, as described in Note 5, were measured at fair value on a recurring basis.
PROPERTY AND EQUIPMENT AND RELATED DEPRECIATION AND AMORTIZATION
Property and equipment are recorded at cost. CALEA capitalizes expenditures for property and equipment in excess of $500. Depreciation of the computer database, computers, and furniture and equipment is provided for on a straight-line basis over the estimated useful lives of the assets, which range from five to ten years. Leasehold improvements are amortized over the shorter of the lease term or the estimated useful lives of the assets. The cost of property and equipment retired or disposed of is removed from the accounts, along with the related accumulated depreciation or amortization, and any gain or loss is reflected in revenue or expense in the accompanying statement of activities. Major additions are capitalized, while replacements, maintenance and repairs that do not improve or extend the lives of the respective assets are expensed as incurred.
REVENUE RECOGNITION
Agency fees consist of accreditation and recognition fees and are recognized as revenue as they are earned by CALEA. Accreditation and recognition fees are deferred upon receipt and are amortized on a straight-line basis over a 22-month period from the date of the contract. Should the accreditation or recognition process require less time, the unamortized balance of the accreditation or recognition fees is recognized as revenue when the process is completed. CALEA may grant a 12-month extension of the accreditation or recognition process. Fees related to extensions are amortized as revenue on a straight-line basis over a 12-month period from the date of the extension agreement. Reaccreditation and re-recognition fees are recognized on a straight- line basis over a 36-month period from the anniversary date of the award. Should an agency withdraw from the process, any remaining deferred revenue for fees would be recognized as revenue.
On-site reviews are recognized as revenue at the time of the on-site review. Amounts received in advance are recorded as deferred revenue.
Conference registration and exhibitor fees are recognized as revenue at the time of the conference or seminar. Amounts received in advance are recorded as other deferred revenue.
Merchandise sales are recorded as revenue when the goods are shipped. The related cost of goods sold is included in the merchandise sales in the accompanying statement of activities. Maintenance fees from sales of the Commission Accreditation Compliance Express (CACE) program are recorded as deferred revenue upon receipt and are recognized in merchandise sales over a 24-month period on a straight-line basis, beginning with the month of sale.
NET ASSETS
Unrestricted net assets represent the portion of expendable funds that are available for support of CALEA’s operations.
FUNCTIONAL ALLOCATION OF EXPENSES
The costs of providing the various programs and other activities have been summarized on a functional basis in the accompanying schedule of functional expenses. Accordingly, certain costs have been allocated among programs and supporting services benefited based on salaries.
30 CALEA® THE GOLD STANDARD IN PUBLIC SAFETY