Page 32 - RFCUNY Annual Report 2016

Research Foundation of The City University of New York and Related Entities

Notes to Consolidated Financial Statements
June 30, 2016 and 2015

(c) Use of Estimates
The preparation of consolidated financial statements in conformity with U.S. generally accepted
accounting principles requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosures of contingencies at the date of the consolidated financial
statements and the reported amounts of revenue and expenses during the reporting period. These
estimates and assumptions are based on management’s best estimates and judgment. Management
evaluates its estimates and assumptions on an ongoing basis using historical experience and other
factors, and adjusts such estimates when facts and circumstances dictate. In the preparation of the
Organization’s consolidated financial statements, management uses significant accounting estimates
with respect to the valuation of accounts receivable and postretirement benefit obligation.
(d) Cash Equivalents
Highly liquid debt instruments with maturities at date of purchase of three months or less are classified as
cash equivalents, except for those short-term investments that are managed by an external investment
manager for long-term investment purposes. As of June 30, 2016 and 2015, the LLC has approximately
$3,972,000 and $6,150,000, respectively, of cash and cash equivalents designated for future capital
expenditures.
(e) Investments
Investments are reported at fair value based upon quoted market prices. Realized and unrealized gains
and losses on investments are reflected in the accompanying consolidated statements of activities.
(f) Rental Revenue Recognition
Base rent income relating to the LLC is recognized on a straight-line basis, rather than in accordance
with lease payment schedules, for purposes of recognizing a constant annual rental income. Scheduled
base rent increases and the effects of rent abatements are spread evenly over the terms of the respec-
tive leases. Differences between the straight-line rents recorded and the amounts actually received are
included in deferred rent receivable. Allowances are provided for uncollectible amounts.
(g) Rental Property
Building and building improvements of the LLC are carried at cost and are depreciated, using the
straight-line method, over their estimated useful lives of 39 years or the life of the improvements, which-
ever is shorter. Significant renovations or improvements, which extend the economic life of the Property,
are capitalized. Expenditures for maintenance and repairs are expensed as incurred.
The LLC reviews the carrying amount of the Property for impairment whenever events or changes
in circumstances indicate that the carrying amount of an asset may not be recoverable. No impairment
adjustments have been made as a result of this review process during 2016 or 2015.

(h) Fixed Assets
Furniture, fixtures, and equipment and leasehold improvements are stated at cost. Depreciation of fur-
niture, fixtures, and equipment is computed on a straight-line basis, over the estimated useful lives of
the assets, ranging from five to seven years. Amortization of leasehold improvements is computed on a
straight-line basis, over the estimated useful lives of the assets, not to exceed the remaining life of the
lease.

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