THE NHP FOUNDATION AND ITS AFFILIATED ENTITIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
Years ended December 31, 2017 and 2016 __________
recoverable. When recovery is reviewed, if the undiscounted cash flows estimated to be generated by the Organization are less than its carrying amount, management compares the carrying amount of the asset to its fair value in order to determine whether an impairment loss has occurred. The amount of the impairment loss is equal to the excess of the asset’s carrying value over its estimated fair value. No impairment loss was recognized for either of the years ended December 31, 2017 and 2016.
Investment in Housing Funds
Investment in NHPF/UA, LLC Investment in NHPF/UA, LLC (NHPF/UA), over which NDFD exercises significant influence but not control, is accounted for under the equity method. NDFD recorded its initial investment at cost, recognizes its share of NHPF/UA’s income or loss, increases its investment for capital contributions, and reduces its investment balance by any distributions received. Cash distributions that NDFD receives in excess of the carrying amount of its investment are recorded as other revenue (if certain criteria are met), and the equity method of accounting is suspended. NDFD would record future equity method earnings only after its share of cumulative earnings during the suspended period exceeds the income recognized for the excess cash distributions. NDFD’s investment in NHPF/UA is periodically reviewed for impairment. NDFD records an impairment charge when events or circumstances change indicating that a decline in fair value below carrying value has occurred and such decline is other than temporary. In accordance with the accounting guidance for the consolidation of variable interest entities, NDFD determines when it should include the assets, liabilities, and activities of variable interest entities (“VIE“) in its financial statements, and when it should disclose information about its relationship with a VIE. The analysis that must be performed to determine which entity should consolidate a VIE focuses on control and economic factors. A VIE is a legal structure used to conduct activities or hold assets, which must be consolidated by a company if it is the primary beneficiary because it has: (1) the power to direct the activities of the VIE that most significantly impact the VIE’s economic performance; and (2) the obligation to absorb losses or received benefits that could potentially be significant to the VIE. If multiple unrelated parties share such power, as defined, no party will be required to consolidate the VIE. Further, the guidance requires continual reconsideration of the primary beneficiary of a VIE. Based on this guidance, NHPF/UA, in which NDFD invests, meets the definition of a VIE. However, management does not consolidate NDFD’s interests in this VIE, as it is not considered to be the primary beneficiary since multiple unrelated parties share the power to direct the activities that are considered most significant to the economic performance of these entities. NDFD currently records the amount of its investment in NHPF/UA as an asset on its statement of financial position,
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