Financial Report 



329 



date of the gift. These assets are depreciated on a straight- 

 line basis over their estimated useful lives as follows: 



Buildings 



Major renovations 



Equipment 



30 years 

 15 years 

 3-10 years 



Certain lands occupied by the Smithsonian's buildings, pri- 

 marily located in the District of Columbia, Maryland and 

 Virginia, were appropriated and reserved by Congress for 

 the Smithsonian's use. The Smithsonian serves as trustee of 

 these lands for as long as they are used to carry out the 

 Smithsonian's mission. These lands are titled in the name 

 of the U.S. government and are not reflected in the accom- 

 panying financial statements. 



(I) Collections 



The Smithsonian acquires its collections, which include 

 works of art, library books, photographic archives, objects 

 and specimens, by purchase using federal or trust funds or 

 by donation. All collections are held for public exhibition, 

 education, or research, furthering the Smithsonian's mis- 

 sion to increase and diffuse knowledge to the public. The 

 Smithsonian protects and preserves its collections, which 

 total more than 140 million items. The Smithsonian's 

 Collections Management policy includes guidance on the 

 preservation, care and maintenance of the collections and 

 procedures relating to the accession/deaccession of items 

 within the collections. 



The Smithsonian's policy is to not capitalize its collec- 

 tions, therefore, no value is assigned to the collections on 

 the statement of financial position. Purchases of collection 

 items are recorded as expense in the year in which the 

 items are acquired. Contributed collection items are not 

 reflected in the financial statements. Proceeds from deac- 

 cessions or insurance recoveries from lost or destroyed col- 

 lection items are reflected as increases in the appropriate 

 net asset class, and are designated for future collection 

 acquisitions. 



Items that are acquired with the intent at the time of 

 acquisition not to add them to the collections but rather to 

 sell, exchange, or otherwise use them for financial gain are 

 not considered collection items, and are recorded at fair 

 market value at date of acquisition as other assets in the 

 statement of financial position. 



(m) Annual Leave 



The Smithsonian's civil service employees earn annual leave 

 in accordance with federal laws and regulations. Separate 

 internal policies apply for trust employees. Annual leave for 

 all employees is recognized as expense when earned. 



(n) Government Grants and Contracts 



The Smithsonian receives grants and enters into contracts 

 with the U.S. government and state and local govern- 

 ments, which primarily provide for cost reimbursement to 

 the Smithsonian. Revenue from governmental grants and 



contracts is classified as unrestricted and is recognized as 

 reimbursable expenditures are incurred. 



(o) Contributions 



The Smithsonian recognizes revenue from all contributions 

 as revenue in the period unconditional promises are 

 received. 



Unrestricted contributions with payments due in future 

 periods are initially recorded as temporarily restricted sup- 

 port, and are reclassified to unrestricted net assets when 

 payments become due. 



When donor restrictions are met on temporarily 

 restricted contributions, the related net assets are reclassi- 

 fied as released from restrictions in the accompanying 

 statement of financial activity. 



Gifts of long-lived assets are recorded as unrestricted 

 revenue in the period received. Contributions of cash and 

 other assets restricted to the acquisition of long-lived assets 

 are recorded as temporarily restricted revenue in the period 

 received. The donor's restrictions expire and the related net 

 assets are released from restriction when the long-lived 

 asset is placed in service by the Smithsonian. 



In-kind contributions of goods and services totaling 

 $7,115 were received in fiscal year 1999 and recorded as 

 program support in the accompanying statement of finan- 

 cial activity. The nature of the in-kind contributions 

 includes donated space and interactive multimedia soft- 

 ware programs. 



A substantial number of volunteers also make significant 

 contributions of time to the Smithsonian, enhancing its 

 activities and programs. In fiscal year 1999, more than 

 5,400 volunteers contributed approximately 476,000 hours 

 of service to the Smithsonian. The value of these contribu- 

 tions is not recognized in the financial statements. 



(p) Advancement 



The Smithsonian raises private financial support from 

 individual donors, corporations and foundations to fund 

 programs and other initiatives, l-'unds are also generated 

 through numerous membership programs. Fund-raising 

 costs are expensed as incurred and reported as advance- 

 ment expense in the statement of financial activity. Mem- 

 bership program costs are amortized over membership 

 terms, typically one year, and are also reported as Advance- 

 ment expenses. 



(q) Comparative Financial Statements 



The statement of financial activity includes certain prior- 

 year summarized comparative information in total but not 

 by net asset class. Such information does not include 

 sufficient detail to constitute a presentation in conformity 

 with generally accepted accounting principles. Accord- 

 ingly, such information should be read in conjunction 

 with the Smithsonian's financial statements for the year 

 ended September 30, 1998, from which the summarized 

 information was derived. 



