2011 Catalyst Annual Report

and unrealized gains and losses are recognized aschanges in net assets in the period in which they occurand investment income is recognized as revenue in theperiod earned. In order to increase consistency andcomparability in fair value measurements, a fair valuehierarchy prioritizes observable and unobservable inputsused to measure fair value into three levels, as describedbelow:Level 1 - Valuations for assets and liabilities that canbe obtained from readily available active pricingsources for market transactions involving identicalassets or liabilities.Level 2 - Valuations for assets and liabilities tradedin less active dealer or broker markets. Valuationsare obtained from third-party pricing services foridentical or similar assets or liabilities.Level 3 - Valuations for assets and liabilities thatare derived from other valuation methodologies,including option pricing models, discounted cashflow models or similar techniques, and not basedon market exchange, dealer, or broker-tradedtransactions.E. Donated goods and services are recognized in thefinancial statements if the services or goods enhanceor create non-financial assets or require specializedskills, provided by individuals possessing those skills andwould typically need to be purchased if not providedby donation. Donated contributions of use of facilitiesare recognized at estimated fair value. A member ofCatalyst’s Board of Directors is an attorney. For manyyears, her law firm has provided pro-bono legal servicesto Catalyst. For the years ended August 31, 2011 and2010, Catalyst recorded contributed goods and servicesamounting to $605,086 and $779,040, respectively, whichare included in revenue, expenses and fixed assets forcapitalized property and equipment in the accompanyingconsolidated financial statements.F. Catalyst considers all highly liquid instruments purchasedwith original maturities of 3 months or less to be cashequivalents, except for cash, money market funds, andcertificates of deposits held as investments.G. Catalyst has determined that no allowance foruncollectible grants and contributions receivableand accounts and other receivables is necessary as ofAugust 31, 2011 and 2010. Such estimate is based onmanagement’s assessments of the creditworthiness of itsdonors, the aged basis of its receivables, as well as currenteconomic conditions and historical information.H. Inventory consists of publications that are sold onCatalyst’s website. Inventory is stated at the lower of cost(specific identification) or market.I. Property and equipment is stated at cost less accumulateddepreciation or amortization. These amounts do notpurport to represent replacement or realizable values.Catalyst capitalizes all owned property and equipmenthaving a useful life of greater than one year and a costof more than $1,000. Depreciation is provided on astraight-line basis over the estimated useful lives of theassets. Leasehold improvements are amortized over thelesser of the useful lives of the improvements or the termof the applicable lease.J. Catalyst leases real property under operating leasesat various dates in the future. Since the rent paymentsincrease over time, Catalyst records an adjustment torent expense each year to reflect its straight-lining policy.The annual adjustment recorded for the years endedAugust 31, 2011 and 2010, amounted to $110,599 and$110,467, respectively. Straight-lining of rent gives riseto a timing difference that is reflected as deferred rentobligation in the accompanying consolidated statementof financial position.K. Catalyst receives cash in advance of special events that areto be held after the statement of financial position date.It is Catalyst’s policy to record the contribution portionof the events as income when received and the exchangeportion as deferred income until earned. Additionally,advisory fee, honoraria, and miscellaneous income arereported as revenue when expenses are incurred inaccordance with the terms of the agreement. Deferredrevenue balances include special event, advisory fee,honoraria, and miscellaneous receipts applicable to thenext fiscal year.L. All elements of financial statements for Catalyst CanadaInc. and Catalyst Europe AG are translated by using acurrency exchange rate. For assets and liabilities, theexchange rate as of the balance sheet date is used. Forrevenues, support and expenses, an average exchangerate for the period is used. As of August 31, 2011, theaccumulated adjustments to net assets related to currencyexchange rates amounted to a decrease in net assets ofapproximately $199,000. For the year ended August31, 2011, Catalyst incurred a loss of $119,000. ThroughFebruary 2012 there are no significant exchange ratechanges.M. The preparation of consolidated financial statementsin conformity with accounting principles generallyaccepted in the United States of America requiresmanagement to make estimates and assumptions thataffect certain reported amounts and disclosures at thedate of the financial statements. Actual results coulddiffer from those estimates.N. Fair value measurements are based on the price that wouldbe received to sell an asset or paid to transfer a liabilityin an orderly transaction between market participants at47 | Catalyst Annual Report 2011