Printer Friendly

Music Library Association.


June 30, 2006

NOTE A -- Nature of business and significant accounting policies

Nature of business

The Music Library Association (the Association) was formed in 1945 as a non-stock, non-profit corporation. The primary purposes of the Association are to promote the establishment, growth, and use of music libraries; to encourage the collection of music and musical literature in libraries; to further studies in musical bibliography; to increase efficiency in music library service and administration; and to promote the profession of music librarianship.

A summary of significant accounting policies follows:

Basis of accounting

The financial statements of the Association have been prepared on the accrual basis of accounting and, accordingly, reflect all significant receivables, payables and other liabilities.

Basis of presentation

Financial statement presentation follows the recommendations of the Financial Accounting Standards Board in its Statement of Financial Accounting Standards (SFAS) No. 117, "Financial Statements of Not-for-Profit Organizations." Under SFAS No. 117, the Association 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.

Use of estimates

The preparation of financial statements 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. Actual results could differ from those estimates.

Exempt status

The Association is exempt from income taxes under Internal Revenue Code Section 501(c)(3) as a public charity and not a private foundation. The Association is also exempt from Wisconsin income tax. However, income from certain activities not directly related to the organization's tax-exempt purpose is subject to taxation as unrelated business income.

Cash and cash equivalents

For purposes of reporting cash flows, the Association considers all investments purchased with a maturity of three months or less to be cash equivalents. As of the balance sheet date, balances of cash at financial banking institutions exceeded the federally insured limit of $100,000. These balances fluctuate greatly during the year and can exceed this $100,000 limit. Management monitors regularly the financial condition of its banking institutions, along with their balances in cash, and tries to keep this potential risk to a minimum.

Accounts receivable

The Association carries its accounts receivable at cost less an allowance for uncollectible accounts. On a periodic basis, the organization evaluates its receivables and establishes an allowance for uncollectible accounts, when deemed necessary, based on its history of past write-offs and collections and current credit conditions. Accounts no longer considered collectible by management are written off.

Donated assets

Donated marketable securities and other noncash assets are recorded as contributions at their estimated fair values at the date of donation. Such donations are reported as unrestricted contributions unless the donor has restricted the donated asset to a specific purpose.


Inventory consists of music publications produced for the Association and is stated at the lower of cost (first-in, first-out method) or market.


Purchased investments are recorded at fair value, and donated investments are recorded as contributions at fair value on the date of receipt. Realized gains and losses on sales of investments are determined on the basis of specific identification of the cost of the security sold.


Equipment is stated at cost. Depreciation of equipment is computed by the straight-line method based on an estimated useful life of 5 years.

Maintenance and repairs of equipment are charged to operations, and major improvements are capitalized.

Depreciation expense amounted to $665 and $610 for the years ended June 30, 2006 and 2005, respectively.

Impairment of long-lived assets

The Association reviews long-lived assets for impairment whenever events or changes in business circumstances indicate that the carrying amount of an asset may not be fully recoverable. An impairment loss would be recognized when the estimated future cash flows from the use of the asset are less than the carrying amount of that asset. To date, there have been no such losses.

Revenue recognition

Contributions received are recorded as unrestricted, temporarily restricted or permanently restricted support, depending on the existence and/or nature of any donor restrictions.

Support that is restricted by the donor is reported as an increase in unrestricted net assets if the restriction expires in the reporting period in which the support is recognized. All other donor-restricted support is reported as an increase in temporarily or permanently restricted net assets, depending on the nature of the restriction. When a restriction expires (that is, when a stipulated time restriction ends or purpose restriction is accomplished), temporarily restricted net assets are reclassified to unrestricted net assets and reported in the statement of activities as net assets released from restrictions.

Interest, dividends, gains and losses on investments are reported as an increase or decrease in unrestricted net assets unless explicitly restricted by donors.

Membership dues

Membership dues are determined on an annual basis. Membership dues are recognized as revenue in the period earned.

Expense allocation

The costs of providing various programs and other activities have been summarized on a functional basis in the Statement of Activities. Accordingly, certain costs have been allocated among the programs and supporting services benefited.


Some items in the 2005 financial statements have been reclassified to be consistent with the current year's presentation. Temporarily restricted net assets which totaled $12,667 were reclassified to unrestricted net assets.

NOTE B -- Investments

Investments are stated at fair value and consist of the following:
 2006 2005

Long-term investments:
 Mutual funds $746,025 $686,142
 Certificates of deposit 60,000 0
 Total long-term investments $806,025 $779,177

Interest and dividends earned on investments and other cash accounts were $26,333 and $12,741 for the years ended June 30, 2006 and 2005, respectively. Investment fees of $4,564 and $4,263 were incurred for the years ended June 30, 2006 and 2005, respectively. These fees are included with administration expenses.

Of the total assets held in investment accounts, 77% and 76% were invested in Fidelity mutual fund accounts as of June 30, 2006 and 2005, respectively.

NOTE C -- Temporarily restricted net assets

Temporarily restricted net assets consist of cash and investments in marketable securities which represent contributions received in current and prior years restricted by donors to be used for awards and publications. Temporarily restricted net assets consist of the following:
 2006 2005

Cash and cash equivalents $14,405 $15,034
Investments in marketable securities 22,521 15,910
 $36,212 $30,944

NOTE D -- Permanently restricted net assets

Permanently restricted net assets consist of cash and investments in marketable securities which represent contributions received in current and prior years restricted by donors for permanent investment. Earnings on permanently restricted net assets are considered temporarily restricted and can be used for awards to third parties. Permanently restricted net assets consist of the following:
 2006 2005

Cash and cash equivalents $2,612 $2,713
Investments in marketable securities 154,580 144,580
 $157,192 $147,293

NOTE E -- Mellon Grant payable

The Association received a $379,000 grant from The Andrew W. Mellon Foundation (the Foundation) to support the development of an online catalog, "Index to Printed Music: Collections and Series (IPM)", in June 2004. As stated in the grant agreement, the Association has no variance power over this asset and is required to disburse the funds on a quarterly basis to the James Adrian Music Company through August 31, 2007. Under the terms of the grant agreement, the Association is required to submit annual progress summaries and financial reports to the Foundation. The Association receives a $5,000 annual management fee to cover expenses generated in overseeing this grant. Interest earned on invested grant proceeds is added to the grant balance and is payable to the Foundation at the completion of the agreement. Disbursements in the amount of $129,000 and $130,000 were paid to the James Adrian Music Company for the years ended June 30, 2006 and 2005, respectively. Mellon Grant payable was $129,084 and $248,960 as of June 30, 2006 and 2005, respectively.
COPYRIGHT 2007 Music Library Association, Inc.
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 2007 Gale, Cengage Learning. All rights reserved.

Article Details
Printer friendly Cite/link Email Feedback
Title Annotation:Financial Statements
Article Type:Financial report
Geographic Code:1USA
Date:Jun 1, 2007
Previous Article:Music Library Association.
Next Article:The printed dissemination of the Roman gradual in Italy during the early modern period.

Related Articles
How would you improve financial reporting?
Interpreting nonprofit financial statements: here's help in assessing your association's fiscal health.
Music Library Association for the year ended June 30, 2002.
Auditor involvement with official statements and Web sites: GFOA believes that as a general rule, state and local governments should be free to...
Report of independent certified public accountants.
Independent auditor's report.
Music Library Association.
Music Library Association.
Music Library Association.
Music Library Association table of contents June 30, 2008.

Terms of use | Privacy policy | Copyright © 2019 Farlex, Inc. | Feedback | For webmasters