L'ASSOCIATION DES FRANCOPHONES DE NANAIMO
NOTES TO FINANCIAL STATEMENTS

(Unaudited) Page 8

MARCH 31, 2014

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
c) Inventory

Inventory is stated at the lower of cost and estimated net realizable value. Cost has been determined
on a first-in, first-out basis. The inventory consists of retail products available for resale.

d) Capital assets

Capital assets are recorded at historical cost and amortization is provided using the straight-line
method at rates intended to amortize the costs of the assets over their estimated useful lives:

Furniture and fixtures 5 years
The Association records one-half of the annual amortization in the year that an asset is purchased.

The Association monitors the recoverability of capital assets based on their long-term service potential.
When a capital asset no longer has any long-term service potential to the Association, the excess of its
net carrying amount over any residual value is recognized as an expense in the statement of
revenue and expenses. Write-downs recognized under this policy are not reversed.

e) Revenue recognition

The Association follows the deferral method of accounting for revenue. Restricted revenue is
recognized in the year in which the related expenses are incurred. Unrestricted revenue is recognized
when received or receivable if the amount to be received can be reasonably estimated and collection is
reasonably assured.

f) Use of estimates

The preparation of financial statements in conformity with Canadian accounting standards for not-for-
profit organizations requires management to make estimates and assumptions that affect the reported
amounts of 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.
Significant areas requiring the use of management estimates relate to the determination of the useful
lives of assets for amortization, recognition of deferred revenue and the amounts recorded as accrued
liabilities.