359 



SMITHSONIAN INSTITUTION 



Notes to Financial Statements 



September 30, 2000 



($ millions) 



The Smithsonian is also the beneficiary of certain perpetual trusts held and administered by 

 others. The present values of the estimated future cash receipts from the trusts are recognized as 

 assets and contribution revenues at the dates the trusts are established. Distributions from the 

 trusts are recorded as investment income and the carrying value of the assets is adjusted for 

 changes in the estimates of future receipts. 



(j) Property and Equipment 



Property and equipment purchased with federal or trust funds are recorded at cost. Property and 

 equipment acquired through transfer from government agencies are recorded at net book value or 

 fair value at the date of transfer, whichever is more readily determinable. Property and 

 equipment acquired through donation are recorded at appraised value at the date of the gift. 

 These assets are depreciated on a straight-line basis over their estimated useful lives as follows: 



Buildings 30 years 



Major renovations 15 years 



Equipment 3-10 years 



Certain lands occupied by the Smithsonian's buildings, primarily 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 its mission. These lands are titled in the name of the U.S. Government and are not 

 included in the accompanying financial statements. 



(k) 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 

 mission to increase and diffuse knowledge to the public. 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. 



In conformity with the practice generally followed by museums, no value is assigned to the 

 collections in the statement of financial position. Purchases of collection items are recognized as 

 reductions in unrestricted net assets in the period of acquisition. Proceeds from deaccessions or 

 insurance recoveries for lost or destroyed collection items are recognized as increases in the 

 appropriate net asset class, and are designated for future collection acquisitions. 



Items that are acquired with the intent to sell, exchange, or otherwise use them for financial gain 

 are not considered collection items and are recorded as other assets at their fair value at the date 

 of acquisition. 



(I) Financial Instruments 



The carrying value of long-term debt obligations in the financial statements exceeds its fair value 

 by approximately S2.8 at September 30, 2000. The fair value of debt is determined based on 

 quoted market prices for publicly traded issues and on the discounted future payments to be 

 made for other issues. The discount rates used approximate current market rates for loans of 

 similar maturities and credit quality. The carrying values of all other financial instruments in the 

 financial statements approximate their fair market values. 



