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CMC Microsystems Annual Report 2007/08
Financials
Summary of Significant Accounting Policies
| March 31, 2008 | |||
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Nature of Business |
The organization is incorporated without share capital under the Canada Corporations Act as a not-for-profit organization. The organization is exempt from income tax under section 149(1)(j) of the Income Tax Act. |
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Accrual Basis of Accounting |
Revenue and expenditures are recorded on the accrual basis, whereby they are reflected in the accounts in the period in which they have been earned and incurred respectively, whether or not such transactions have been finally settled by the receipt or payment of money. |
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Fund Accounting |
The NSERC Funded Portion of the National Design Network Fund reports only NSERC granted resources that are to be used in support of the National Design Network. |
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Foreign Currency Translation |
Foreign currency accounts are translated into Canadian dollars as follows: At the transaction date, each asset, liability, revenue and expense is translated into Canadian dollars by the use of the exchange rate in effect at that date. At the year end date, monetary assets and liabilities are translated into Canadian dollars by using the exchange rate in effect at that date. The resulting foreign exchange gains and losses are included in income in the current period except for the foreign currency gains and losses on long term monetary items which are deferred and amortized over the remaining terms of the related items. |
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Investment in DMT Microsystems Corporation |
Investment in DMT Microsystems Corporation, a wholly owned CMC Microsystems Corporation owned subsidy, is accounted for using the equity method. |
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Capital Assets |
Capital assets are stated at cost less accumulated amortization. Amortization based on the estimated useful life of the asset is calculated as follows:
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| Furniture and fixtures | 20 % diminishing balance basis | ||
| Leasehold improvements | 10 years straight line basis | ||
| Computer software | 100 % diminishing balance basis |
Amortization of capital assets acquired during the year are calculated at one-half rates.
Computer Equipment Located at Universities
The cost of acquiring computer equipment provided on term loan to universities is expensed when incurred.
Revenue Recognition
The organization follows the deferral method of accounting for contributions. Restricted contributions are recognized as revenue in the year in which the related expenses are incurred. NSERC funding and unrestricted contributions are recognized as revenue when received or receivable if the amount to be received can be reasonably estimated and the collection is reasonably assured.
Contributions-In-Kind
No value is ascribed in the Statement of Operations to donated material and services which are received under the matching provisions of the agreement with the Natural Sciences and Engineering Research Council of Canada.
Use of Estimates
The preparation of financial statements in accordance with Canadian generally accepted accounting principles 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 revenues and expenses during the reporting period. Actual results could differ from management's best estimates, as additional information becomes available in the future. These estimates and assumptions are reviewed periodically and, as adjustments become necessary, they are reported in the periods in which they become known.
Financial Instruments
Effective April 1, 2007, the organization adopted the CICA Handbook Section 3855, Financial Instruments Recognition and Measurement. The new accounting standards for financial instruments require that all financial assets and liabilities be classified according to their characteristics, management's intention or the choice of category in certain circumstances. All financial assets must be classified as either held for trading, held to maturity, available for sale or loans and receivables. Financial liabilities must be classified as held-for-trading or other liabilities. Financial assets and financial liabilities that are purchased and incurred with the intention of generating profits in the near term are classified as held for trading, and are accounted for at fair value with the change in the fair value recognized in the results of operations. Those instruments that have a fixed maturity date, where the organization intends and has the ability to hold to maturity, are classified as held-to-maturity and accounted for at amortized cost using the effective interest rate method. Loans and receivables are also accounted for at amortized cost using the effective interest rate method. When initially recognized, all financial assets and liabilities are recorded at fair value on the balance sheet. In subsequent periods, financial instruments will be valued at fair value, except for items that are classified in the following categories, which will be measured at amortized cost. These categories are loans and receivables, investments
held-to-maturity and financial liabilities not held-for-trading purposes.
An allowance for impairment that is other than temporary for financial assets categorized as loans and receivables, and investments held-to-maturity is recognized in the results of operations.
Effective April 1, 2007, the organization also adopted the CICA Handbook Section 3861, Financial Instruments Disclosures and Presentation, which establishes standards for presentation and disclosure of financial instruments. The organization's financial instruments consist of cash, accounts receivable, GST recoverable and accounts payable and accrued liabilities. Unless otherwise noted, it is management's opinion that the organization is not exposed to significant interest, currency or credit risks arising from these financial instruments.
The organization purchases some of its equipment in U.S. dollars. A decrease in the value of the Canadian dollar relative to the U.S. dollar could increase the cost of these equipment purchases. The organization mitigates foreign currency risk by purchasing U.S. dollars when initiating a purchase order for equipment being purchased in U.S. dollars.
The organization does not have a significant exposure to any individual customer or supplier.
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