John’ s Island Club, Inc. Notes to Financial Statements
Note 1. Nature of Organization and Significant Accounting Policies( Continued)
The Club records an allowance for credit losses measured over the contractual life of the receivable based on an assessment of historical collection activity and current and forecasted future economic conditions.
Recently issued accounting pronouncements: In July 2025, the Financial Accounting Standards Board( FASB) issued Accounting Standards Update( ASU) 2025-05, Financial Instruments— Credit Losses( Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets. The ASU introduces a practical expedient and, for entities other than public business entities, an accounting policy election to simplify the application of Topic 326, Financial Instruments— Credit Losses, to current accounts receivable and current contract assets arising from revenue transactions accounted for under Topic 326, Revenue from Contracts with Customers.
The ASU is effective for all entities for annual reporting periods beginning after December 15, 2025, and interim reporting periods within those annual reporting periods. Early adoption is permitted in both interim and annual reporting periods in which financial statements have not yet been issued or made available for issuance. The Club is currently evaluating the impact of this new guidance on its financial statements.
Inventories: Inventories are valued at the lower of cost or net realizable value. Cost is determined using the first-in, first-out( FIFO) method.
Property and equipment: Property and equipment is carried at cost. The Club capitalized property and equipment at cost over $ 2,500 and a useful life exceeding two years. Depreciation is computed using the straight-line method over the following estimated useful lives of the depreciable assets:
Years
Land and golf course improvements |
5-20 |
Buildings and improvements |
2-35 |
Irrigation systems |
5-20 |
Furniture, fixtures, vehicles and equipment |
3-5 |
Valuation of long-lived assets: Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. There was no impairment identified during the years ended December 31, 2025 and 2024.
Leases: The Club determines if an arrangement is or contains a lease at inception, which is the date on which the terms of the contract are agreed to, and the agreement creates enforceable rights and obligations. A contract is or contains a lease when:( i) explicitly or implicitly identified assets have been deployed in the contract, and( ii) the Club obtains substantially all of the economic benefits from the use of that underlying asset and directs how and for what purpose the asset is used during the term of the contract. The Club also considers whether its service arrangements include the right to control the use of an asset.
The Club recognizes most leases on its statements of financial position as a right-of-use( ROU) asset representing the right to use an underlying asset and a lease liability representing the obligation to make lease payments over the lease term, measured on a discounted basis. Leases are classified as either finance leases or operating leases based on certain criteria. Classification of the lease affects the pattern of expense recognition in the statements of activities.
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