SAE Foundation Annual Report 2012 - 46

SAE FOUNDATION
Notes to the Financial Statements (Continued)
Note 1 - Summary of Significant Accounting Policies (Continued)
F.

Investments (Continued)

During 2012, SAE’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, SAE has adopted a
total return investment policy seeking to achieve for the investments held in the
Foundation’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 Foundation 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.
G.

Inventories

Inventories and supplies consist of medals and awards not yet given and are stated at
the lower of cost (determined on the first-in, first-out or average cost method) or market.
H.

Furniture and Equipment

Furniture and equipment acquired is recorded at cost. Depreciation is provided by the
straight-line method over the estimated useful lives of the assets.
Maintenance and repairs which are not considered to extend the useful lives of assets
are charged to operations as incurred. Expenditures exceeding $5,000 for additions and
improvements are capitalized. Upon sale or retirement, the cost of assets and related
allowances are removed from the accounts and any resulting gains or losses are included in
income (expense) for the year.

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SAE Foundation Annual Report 2012

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