Works of Art, Living and Other Specimens 



The Institution acquires its collections, which include works of art, library 

 books, photographic archives, ob|ects and specimens, from purchases using 

 federal or private funds or by donation. All collections are held for public 

 exhibition, education, or research, furthering the Institution's mission to 

 increase and diffuse knowledge to the public. The Institution provides pro- 

 tection and preservation services for its collections. 



In accordance with policies generally followed by museums, no value is 

 assigned to the collections on the statement of financial condition. Collection 

 purchases are expensed currently Proceeds from deaccessions are recognized 

 as revenue in the year of sale, and are designated for future collection acqui- 

 sitions. 



Property and Equipment 



Federal funds 



Property and equipment purchased with federal funds are recorded in the 

 capital funds at cost and depreciated on a straight-line basis over their useful 

 lives as follows: 



Buildings 30 years 



Major renovations 15 years 



Nonexpendable equipment 10 years 



Certain lands occupied by the Institution's buildings were appropriated and 

 reserved by Congress for the Institution and are not reflected in the accom- 

 panying financial statements. Property and nonexpendable equipment 

 acquired through transfer from government agencies are capitalized at the 

 net book value or fair value, whichever is more readily determinable. 



Trust Funds 



Property and equipment purchased with trust funds for use by 

 nonincome-producing activities are recorded at cost, or appraised value at 

 date of gift, except for gifts of certain islands in the Chesapeake Bay, which 

 has been recorded at nominal values. 



Capital improvements and equipment purchased with trust funds for use 

 by income-producing activities are capitalized at cost in the current funds. 

 Property and equipment are depreciated on the straight-line basis over their 

 useful lives as follows: 



Buildings 30 years 



Major renovations 15 years 



Equipment 3-10 years 



Government Grants and Contracts 



The Institution receives grants and enters into contracts, with the U.S. gov- 

 ernment and state and local governments, which primarily provide for cost 

 reimbursement to the Institution. Governmental grant and contract revenue 

 is recognized as reimbursable expenditures are incurred. 



Gifts, Bequests, and Other Grants 



The Institution recognizes revenue from gifts, bequests and private grants in 

 the year the cash is received. 



The Institution records pledges based upon letters signed by donors. 

 Pledges are recorded at net realizable value as a receivable and as deferred 

 revenue on the statement of financial condition. Revenue from pledges is rec- 

 ognized in the year the pledged funds are collected. 



Contributed Services and Facilities 



A substantial number of volunteers make significant contributions of their 

 time to further of the Institution's programs. The Institution also uses certain 

 facilities for a nominal charge. The value of the contributed time and facili- 

 ties is not reflected in these statements as it is not susceptible to objective 

 measurement or valuation. 



Annual Leave 



The Institution's civil service employees earn annual leave in accordance with 

 federal laws and regulations. Separate rules apply for trust employees. 

 Annual leave for all employees is recognized as expense when earned. 



Cash and Balances with the U.S. Treasury 



Amounts represent cash deposited with financial institutions and balances 

 held by the U.S. Treasury which are available for disbursement. Cash interest 

 payments were $201,000 and $781,000 in 1995 and 1994, respectively. 



Statements of Financial Accounting Standards No.'s 116 and 117 

 For fiscal year 1996, the Institution will be required to implement SFAS 

 No. 116 Accounting for Contributions Received and Contributions Made, 

 and SFAS No. 117 Financial Statements of Not-For-Profit Organizations. 

 Among the significant provisions of SFAS 116 is the recognition of pledges as 

 revenue when made. SFAS 117 requires changes in the display of financial 

 statements from fund accounnng to a display based on the concept of "net 

 assets." The impact of these pronouncements and the options available to 

 the Institution are under study. 



(2) Affiliate Relationships 



The Institution provides certain fiscal, procurement facilities and administra- 

 tive services to several separately incorporated affiliated organizations for 

 which certain officials of the Institution serve on the governing boards. The 

 amounts paid to the Institution by these organizations for the above services 

 totaled $169,000 for the trust funds and $370,000 for the fedetal funds for 

 fiscal year 1995. 



Deposits held in custody for these organizations at September 30, 1995, 

 were $5,996,000 and $1,349,000 for trust and federal funds, respectively. 



(3) Investments 



At September 30, 1995, investments consisted of: 



(SOOUsl 



Carrying value Market value 



Current funds. 



Cash equivalents 



IS government obligations 



Common stocks 



S 22.498 



49.720 



22.502 

 49.434 

 5 





72.224 



7 1 .94 1 



Plant funds 



U.S. government obligations 



Common stocks 



361 



125 



365 

 288 





486 



653 



Endowment and similar funds: 

 Pooled in vestments : 

 Cash equivalents 

 US government and 



quasi-govemment obligations 

 Corporate bonds and other obligation: 

 Common and preferred stock: 



24.638 



34.441 



34.671 



52.638 



54.451 



277.144 



328.129 



Total pooled investments 







44 1 "« 



Nonpooled investments: 



Deposit with U.S. Treasury 



i 'ij.'::.. 1 ' c :ru.:- 





1.010 

 1.467 



1.040 



1 .580 



Toul nonpooled investments 





: 4 ■ 



. 620 



Tolal endowment and similar funds 





391.338 



444.509 



Total investments 



S 



4h4ii4v 



517.103 



(4) Endowment and Similar Funds 



The Institution uses the total return approach to investment management of 

 endowment funds and quasi-endowment funds. Each year, the endowment 

 pays out an amount fot current expenditures based upon a number of factors 

 evaluated and approved by the Board of Regents. The payout for 1995 was 

 4.2 percent of the average market value of the endowment over the prior five 

 years. The difference between the income (i.e., dividends, interest and realized 

 capital gains I and the payout for the year is reinvested or withdrawn from 

 previously accumulated returns. Actual income exceeded the payout amount 

 in fiscal year 1995 and the excess was transferred from current funds to the 

 endowment and similar funds (see note 12). 



Substantially all of the investments of the endowment and similar funds are 

 pooled on a market value basis. Each fund subscribes to or disposes of units 



3 26 



