L'Association Des Francophones De Nanaimo Notes to the Financial Statements For the year ended March 31, 2008 Significant accounting policies (Continued from previous page) Revenue recognition The Association follows the’ deferral method of accounting for contributions. Restricted contributions are recognized as revenue in the year in which the related expenses are incurred. Unrestricted contributions are recognized as revenue when received or receivable if the amount to be received can be reasonably estimated and collections is reasonably assured. Grant revenue is recognized as revenue in the funding period or when the expenditure is made, as applicable. Donation revenue is recognized when the contribution is received. Gifts in kind are recognized in the year received. Goods sold, fees and miscellaneous revenue are recognized when cash is received and the service or product is delivered. Inventory Inventory is valued at the lower of cost if purchased, fair value if contributed and net realizable value. Capital assets Capital assets are carried at cost if purchased, or fair value at the date of acquisition if received by gift. Proceeds of disposals, less carrying values of these assets are reported in the statement of operations as gains or losses on disposal. Amortization is provided using the straight-line method at rates intended to amortize the cost of assets over their estimated useful lives. Rate Computer equipment 3 years Computer software 1 years Equipment 5 years Furniture and fixtures 5 years Small tools 5 years In the year of acquisition, amortization is taken at one-half of the above rates. Measurement uncertainty (use of estimates) The preparation of financial statements in conformity with Canadian generally accepted accounting principles 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 revenues and expenses during the reporting period. Accounts receivable are stated after evaluation as to their collectibility and an appropriate allowance for doubtful accounts is provided where considered necessary. Amortization is based on the estimated useful life of equipment. Provisions are made for slow moving and obsolete inventory. These estimates and assumptions are reviewed periodically and, as adjustments become necessary they are reported in earnings in the periods in which they become known. Financial instruments Held for trading: Any financial instrument whose fair value can be reliably measured may be designated as held for trading on initial recognition or adoption of CICA 3855 Financial Instruments - Recognition and Measurement, even if that instrument would not otherwise satisfy the definition of held for trading. The Association has classified the following financial assets and liabilities as held for trading: cash, bank indebtedness, short term investment, and investment. These instruments are initially recognized at their fair value. Fair value is approximated by the instrument’s initial cost in a transaction between unrelated parties. Held for trading financial instruments are subsequently measured at their fair value. Gains and losses arising from changes in fair value are recognized immediately in revenue or expense. , Mp