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STUDEBAKER NATIONAL MUSEUM, INC. ' Notes to Financial Statements December 31,2016 NOTE 1 -SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES-CONTINUED Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect certain reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reported period. Accordingly, actual results could differ from those estimates. Significant estimates used in the accompanying financial statements include the allocations of costs among program and supporting services. ' Cash and Cash Equivalents The Museum is required to have a separate bank account for the car raffle fund as this fund is maintained with donor stipulations. The Museum considers all highly liquid investments with a maturity of three months or less to be cash equivalents. The Museum has cash and cash equivalents in high quality financial institutions, which at times may exceed the $250,000 FDIC insurance limitations at each institution. The Museum has not experienced any losses in such securities and believes it is not exposed to any significant credit risk. 1 Accounts Receivable As of December 31, 2016 and 2015, the Museum's management believes all outstanding balances to be fully collectible. Therefore, no allowance for doubtful accounts has been ' recorded. The Museum does not accrue interest on any of its past due receivable balances. Gift Shop Inventories Gift shop inventories of merchandise, clothing and collectibles are stated at cost as determined on a first-in, first-out(FIFO)basis. Collections As of December 31, 2016 and 2015,the Museum has in its possession the following categories of vehicles and artifacts: ' The original collection of forty-three vehicles on loan from the City of South Bend. A collection of fifty-eight vehicles from individual donors. A collection of sixteen vehicles on loan from individual donors. ' A collection of ten vehicles on loan for a special exhibit until June 2017. Other artifacts on loan from the City of South Bend and individual donors. In conformity with the practice followed by many museums, vehicles and other artifacts donated or purchased are not included in the Statements of Financial Position; expenditures or receipts are included in exhibits and restoration expense. Purchases of collection items are recorded as decreases in temporarily restricted net assets as net assets released from ' restrictions. Proceeds from deaccessions are reported as increases in temporarily restricted net assets, as the funds are to be used in a manner similar to the original restriction. (See auditors' report.) 7