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2010
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11 FINANCIAL STATEMENTS
VII
1. PURPOSE OF THE ORGANIZATION
The Vancouver Art Gallery Association (the “Association”) is a
not-for-profit organization incorporated in April 1931 under the
Society Act (British Columbia). Its objectives are to establish and
maintain an art gallery for the perpetual benefit of the City of
Vancouver and its citizens. It is a registered Canadian charity
for Canadian income tax purposes.
2. SIGNIFICANT ACCOUNTING POLICIES
These financial statements have been prepared in accordance
with Canadian generally accepted accounting principles and
include the following significant accounting policies:
(a) Fund accounting
These financial statements include the undernoted funds which
are segregated for purposes of carrying on specific activities as
described below.
(i) The General Fund reflects the results of general operations
of the Association.
(ii) The Building Fund was established in 2008 for the express
purpose of accumulating, managing and distributing funds to
plan, develop and build a new Vancouver Art Gallery (note 7).
(iii) The Acquisitions Fund was established in 1984 through funds
from the sale of the original Georgia Street building and receives
income earned by The Vancouver Art Gallery Endowment Fund
for Acquisitions of Art. The Association also receives income
from The Vancouver Art Gallery Foundation (the “Foundation”)
which has established several acquisition endowment funds
(note 11(a)).
In addition, the Life Benefactors Endowment Fund was initially
established in 1989 and the income from the Fund is intended to
finance special projects as determined by the Board of Trustees.
This fund is permanently restricted and administered by the
Vancouver Foundation as described in note 4 and is not included
in these financial statements.
(b) Basis of accounting
(i) Cash and cash equivalents:
Cash and cash equivalents consist of cash and highly liquid
investments with terms to maturity of three months or less at
the date of acquisition.
(ii) Prepaid expenses and exhibition costs:
The balance is comprised primarily of exhibition expenditures
that have been paid by the Association, which relate to exhibi-
tions to be held in subsequent years.
(iii) Inventories:
Inventories are comprised primarily of books, jewellery, paper
products, gifts, reproductions and clothing held for sale in the-
Gallery Store and is stated at the lower of cost and net realizable
value. Cost is determined on a weighted average basis. Costs,
such as storage costs and administrative overhead that do not
contribute to bringing inventories to their present location and
condition, are specifically excluded from the cost of inventories
and expensed in the period incurred. Net realizable value is
defined as the anticipated selling price less the costs to sell.
Any previous writedowns to net realizable value are reversed
when there is a subsequent increase in the value of inventories.
(iv) Revenue recognition:
The Association follows the deferral method of accounting for
contributions which include donations, bequests and govern-
ment grants. Under this method of accounting, revenue received
with specific external restrictions is deferred and recognized in
the period the restrictions are met.
The portions of membership fees and exhibition loan fees relat-
ing to future periods are deferred.
Gallery Store and Artist Editions sales revenues are recognized
at the time the sales are made.
Unrestricted contributions are recognized as revenue when re-
ceived or receivable. Pledged amounts are recorded as revenue
when the amount to be received can be reasonably estimated,
typically when signed pledge forms are received, and ultimate
collection is reasonably assured. At June 30, 2011, the Asso-
ciation has recorded $678,000 (2010 – $886,000) of pledges as
revenue which are included in accounts receivable.
Revenues and expenses related to fundraising and other special
events are recorded on a gross basis.
(v) Capital assets:
Capital assets are recorded at cost and are amortized on a
straight-line basis over the useful lives of the assets as follows:
Asset
Rate
Computers
3–5 years
Equipment
3–10 years
Furniture and building fixtures
5–25 years
Equipment under capital lease
5–15 years
(vi) Foreign currency translation:
Transactions denominated in a foreign currency are translated
to Canadian dollars at the rate of exchange in effect at the time
of the translation. Monetary assets and liabilities denominated in
foreign currencies have been translated at the rate of exchange
in effect at year end. Exchange adjustments are included in deter-
mining earnings in the year in which they occur.
VANCOUVER ART GALLERY ASSOCIATION
NOTES TO FINANCIAL STATEMENTS
Year ended June 30, 2011