AMERICAN WELDING SOCIETY, INC., AND AWS FOUNDATION NOTES TO COMBINED FINANCIAL STATEMENTS DECEMBER 31, 2015 1. NATURE OF ORGANIZATIONS AND SIGNIFICANT ACCOUNTING POLICIES Organizations and Purpose American Welding Society, Inc. (“AWS”) and AWS Foundation (“Foundation”) (collectively, the “Organizations”) are not-forprofit entities, exempt from income tax under Section 501(c)(3) of the Internal Revenue Code and are primarily engaged in welding technology, education and research activities. The financial statements of AWS include the accounts of Weldmex, LLC, 8669 Doral, LLC and International Excellence, LLC. On October 16, 2012, AWS acquired a 100% interest in Weldmex, LLC (NOTE 3). In connection with the purchase of the Organizations’ new headquarters, AWS created 8669 Doral, LLC. In 2014, AWS created International Excellence, LLC to establish its Asia operations (NOTE 6). On April 7, 2014, AWS established Weldmex – AWS, S. De R.L. De C.V. (“Weldmex – Mexico”), a limited liability company in Mexico for bank purposes. Weldmex – Mexico was established through Weldmex, LLC and 8669 Doral, LLC, both disregarded entities of AWS and formed in the United States. In December 2013, the Foundation received a transfer from AWS to become self-supporting. Earnings from the transfer are to provide for the Foundation operating expenses going forward. Since the Foundation’s inception, AWS covered for the Foundation’s operating expenses until December 31, 2014. In 2015, the Foundation was entirely self-supported therefore AWS did not incur any expenses on behalf of the Foundation. Basis of Accounting The combined financial statements have been prepared on the accrual basis of accounting in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”). The accounts of the Organizations are maintained for internal reporting purposes in accordance with the principles of fund accounting. Principles of Combination The accompanying combined financial statements include the accounts of American Welding Society, Inc. and its affiliate, AWS Foundation. All material inter-organization accounts and transactions have been eliminated in the combination. Basis of Presentation Net assets and revenues, gains and losses are classified into three classes of net assets based on the existence or absence of donor-imposed restrictions. The three classes of net asset categories are as follows: • Unrestricted — Net assets which are free of donor-imposed restrictions; all revenues, gains, and losses that are not changes in permanently or temporarily restricted net assets. • Temporarily Restricted — Net assets where the use by the Organizations is limited by donor-imposed stipulations that either expire by the passage of time or that can be fulfilled or removed by actions of the Organizations pursuant to those stipulations. • Permanently Restricted — Net assets where the use by the Organizations is limited by donor-imposed stipulations that neither expire with the passage of time nor can be fulfilled or otherwise removed by actions of the Organizations. The transactions of the Organizations are categorized into separate funds. The purpose and net asset classification are as follows: • Operating — This fund is used to account for all unrestricted net assets of AWS, except for those accounted for in the reserve and property funds. The operating fund also provides administrative support to the Foundation. 46 WELDING JOURNAL / JUNE 2016
Welding Journal | June 2016
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