CULTURAL COUNCIL OF NOTES TO FINANCIAL STATEMENTS

PALM BEACH COUNTY, INC.

For the Year Ended September 30, 2022

1. Business and Summary of Significant Accounting Policies, continued

In-Kind Contributions

 Contributed Property – Contributions of property are recorded as support at their estimated fair value at the date of donation. Such contributions are reported as support without donor restrictions unless the donor has restricted the use of the contributed asset to a specific purpose. Assets contributed with explicit restrictions regarding their use and contributions of cash that must be used to acquire property and equipment are reported as restricted support. Absent donor stipulations regarding how long those donated assets must be maintained, the Council reports expirations of donor restrictions when the contributed or acquired assets are placed in service as instructed by the donor and reclassifies net assets with donor restrictions to net assets without donor restrictions.

 Contributed Services – The Council follows the guidance of FASB ASC 958-605, Revenue Recognition, for the accounting of contributed services. In accordance with this guidance, donated services are recognized as contributions if the services (a) create or enhance nonfinancial assets or (b) require specialized skills, are performed by people with those skills, and would otherwise be purchased by the Council. Theses services are reflected in the financial statement at their estimated fair market value at their date of receipt. Generally, contributed services that do not satisfy the criteria and are not recognized in the financial statements. However, certain operating expenses are paid on behalf of the Council as described in Note 14.

Store and Gallery Sales

The Council maintains a retail store to promote the works of local artists and vendors. These items are held on consignment and therefore are not recorded on the Council’s financial statements. Sales derived from the store and gallery are recognized as revenue when sold and totaled approximately $38,000 for the year ended September 30, 2022. Commissions to the artists and related costs to cultural organizations amounted to approximately $27,900 for the same fiscal period.

Advertising

Advertising costs are expensed when incurred. Total advertising expense for the year ended September 30, 2022 was $1,912,281 and is reflected under agency, advertising, and marketing in the Statement of Functional Expenses.

Tax Status

The Council is a Florida not-for-profit corporation, other than a private foundation, pursuant to Internal Revenue Code Section 501(c)(3) and, as such, is not required to pay income taxes on its exempt function income. However, income from certain activities not directly related to the Council's tax-exempt purpose is subject to taxation as unrelated business income. For the year ended September 30, 2022, management does not believe the Council has any liability with respect to unrelated business activities, and therefore no provision for income taxes has been made.