PALM BEACH COUNTY SPORTS COMMISSION, INC.

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED SEPTEMBER 30, 2022, AND 2021

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont'd.)

New Accounting Pronouncements

In February 2016, the FASB issued ASU 2016-02 – Leases (Topic 842). The amendments in this update supersede much of the existing authoritative guidance for leases and will require lessees to recognize rightof-use assets and liabilities for most leases with terms longer than twelve months. This standard is effective for annual reporting periods beginning after December 15, 2021. The Commission has evaluated the impact of this standard on its financial statements and will implement for the fiscal year beginning October 1, 2022.

Recently Adopted Accounting Policies

As of October 1, 2020, the Commission adopted the provisions of FASB ASU 2014-09 – Revenue from Contracts with Customers (Topic 606). The core principle of the guidance is that an entity should recognize revenue to depict the transfer of goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled. The Commission has evaluated the impact of the standard and determined that it did not result in significant changes to its method of revenue recognition.

As of October 1, 2020, the Commission adopted amendments to provisions of FASB ASU 2016-18 –Statement of Cash Flows (Topic 230): Restricted Cash. The implementation of ASU 2016-18 affects the presentation in the statement of cash flows to provide information that reconciles cash and restricted cash to amounts reported in the statement of financial position.

NOTE 2 - CONTRACT WITH PALM BEACH COUNTY

Effective February 1, 2015, the County levied a sixth cent of Bed Tax with an additional allocation to the Commission of 11.62%. Increasing the funding for this contract to 8.16% of the second, third, fifth, and sixth cent of the Tourist Development Tax. The Commission enters a multi-year administrative services and agency contract with the County. The contract provides that the Commission will perform or administer various functions such as attracting sports events, advertising, public relations, sports marketing and trade shows, familiarization tours and other projects and promotional services to assist the County in its sporting promotion efforts. The Commission’s contract with the County totaled $1,854,000 of which $1,843,337 was recognized in the Statement of Activities for the fiscal year ended September 30, 2022. As of September 30, 2022, the cumulative reserve balance totaled $4,278,344 and remains earmarked for the Commission's use in accordance with the contract with the County.

On September 13, 2022, the Commission and the County entered into a new five-year agreement (R20221019) for the period October 1, 2022, through September 30, 2027. The contract is updated annually for certain exhibits (e.g., budget, org chart, etc.) but the body of the contract historically remains unchanged throughout the contract period.

The Commission also has in-kind activity with the County as further illustrated in Note 7.