SAE Annual Report 2012 - 40

SAE INTERNATIONAL AND SUBSIDIARIES
Notes to the Consolidated Financial Statements (Continued)
Note 1 - Summary of Significant Accounting Policies (Continued)
H. Investments (Continued)
The Organization has received contributions that are permanently restricted by the
donors, for the purpose of granting scholarships and awards. The income from certain
permanently restricted contributions is required to be spent in predetermined amounts as
specified by the donor. The income from other permanently restricted donations does not
have specified spending amounts.
During 2012, the Organization's Board of Directors elected to follow a total return
policy with respect to its permanently restricted funds, where no specified spending amount
has been stipulated by the donor, in accordance with Pennsylvania law. As such, the
Organization has adopted a total return investment policy seeking to achieve for the
investments held in the Organization's restricted accounts a reasonable long-term total
return, consistent with acceptable investment risk, derived both from appreciation of capital
and from earnings and distributions with respect to capital.
The Board of Directors has
documented an investment spending policy consistent with state law. Under this policy,
where there is no stipulated spending amount from the donor, the Organization may annually
transfer up to 5½% of the three-year rolling average market value of total invested funds to
operating funds.
The original contributions are maintained in permanently restricted net assets. Net
appreciation or depreciation in the fair value of
investments is reflected in temporarily
restricted investment income (loss).
Unrealized gains and losses on permanently restricted investments are reflected in
temporarily restricted revenues and gains as described above.
In years when the income
transfer is greater than the actual earnings, or when there is a loss, the excess is charged to
temporarily restricted net assets to the extent of accumulated prior year earnings. Any
excess is charged to unrestricted net assets.
I.
Inventories
Inventories and supplies are stated at the lower of cost (determined on the first-in, firstout
or average cost method) or market.
J. Property and Equipment
Property and equipment acquired is recorded at cost. Depreciation is provided by the
straight-line method over the estimated useful lives of the assets.
40
Page 14

SAE Annual Report 2012

Table of Contents for the Digital Edition of SAE Annual Report 2012