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HAWAII ISLAND HUMANE SOCIETY <br /> Notes to the Financial Statements <br /> June 30, 2009 <br /> Note 1. ORGANIZATION <br /> The Hawaii Island Humane Society is a non - profit organization incorporated under the laws of the <br /> State of Hawaii on May 10, 1962. Hawaii Island Humane Society is organized for the prevention of <br /> cruel and /or inhumane treatment of animals. They also provide shelter for old, homeless, <br /> abandoned, sick or injured animals, as well as, encourage, promote and conduct research relating to <br /> the prevention of cruel and inhumane treatment of animals. <br /> The Hawaii Island Humane Society is responsible for carrying out animal control for the County of <br /> Hawaii for the entire island of Hawaii. They maintain shelters in each of three island locations; <br /> Kona, Kea'au and Waimea. <br /> Note 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES <br /> Method of Accounting: The Organization uses the accrual method of accounting for financial <br /> statement reporting according to generally accepted accounting principles. Under this method of <br /> accounting, revenue is recognized when earned rather than when received and expenses are <br /> recognized when incurred rather than when paid. <br /> Revenue Recognition: Contributions received are recorded as unrestricted, temporarily restricted, or <br /> permanently restricted support, depending on the existence and /or nature of any donor restrictions. <br /> Grants and other contributions of cash are reported as temporarily restricted support if they are <br /> received with donor stipulations that limit the use of the donated assets. When the donor restriction <br /> expires, that is, when a stipulated time restriction ends or purpose restriction is accomplished, <br /> temporarily restricted net assets are reclassified to unrestricted net assets and reported in the <br /> statement of activities as net assets released from restrictions. <br /> Cash and Cash Equivalents: For the purpose of the statement of cash flows, cash is defined as <br /> demand deposits and savings accounts. <br /> Investments: The Organization has adopted SFAS No. 124, "Accounting for Certain Investments <br /> Held by Not-for-Profit Organizations." Under SFAS No. 124, investments are stated at fair value <br /> and the net unrealized appreciation or depreciation on investments held is included in the change in <br /> net assets in the accompanying statements of activities. Purchased investments are carried at market <br /> value. Donated investments are recorded at their fair market value on the date of donation. Gains <br /> and losses on the sale of investments are accounted for in the net asset group where the related <br /> investments are recorded. Ordinary investment income is also accounted for in the net asset group <br /> where the investments are recorded. <br /> Property and Equipment: The Society capitalizes all furniture and equipment with a useful life <br /> greater than one year and a cost greater than $1,000. Property and equipment are stated at cost or, if <br /> donated, at the approximate fair value at the date of donation. Depreciation is computed using the <br /> straight -line method over the assets' estimated useful lives. <br /> Page 9 <br />