March 31, 2009
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Nature of Business
| The organization is incorporated without share capital under the Canada Corporations Act as a not for profit organization. The organization is exempt from income tax under
section 149(1)(j) of the Income Tax Act.
The organization's principal objective is to enable and accelerate Canadian
competitiveness through microsystems. |
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Accrual Basis of Accounting
| Revenue and expenditures are recorded on the accrual basis, whereby they are reflected in the accounts in the period in which they have been earned and incurred respectively, whether or not such transactions have been finally settled by the receipt or payment of money. |
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Fund Accounting
| The NSERC Funded Portion of the National Design Network Fund reports only NSERC granted resources that are to be used in support of the National Design Network.
The Other Fund accounts for the organization's non NSERC supported activities.
The ICP Fund (Indirect Cost Program) accounts for some indirect expenditures incurred for the National Design Network. |
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Foreign Currency Translation
| Foreign currency accounts are translated into Canadian dollars as follows:
At the transaction date, each asset, liability, revenue and expense is translated into Canadian dollars by the use of the exchange rate in effect at that date. At the year end date, monetary assets and liabilities are translated into Canadian dollars by using the exchange rate in effect at that date. The resulting foreign exchange gains and losses are included in income in the current period except for the foreign currency gains and losses on long term monetary items which are deferred and amortized over the remaining terms of the related items. |
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Investment in DMT Microsystems Corporation
| Investment in DMT Microsystems Corporation, a wholly owned subsidiary, is accounted for using the equity method. |
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Capital Assets
| Capital assets are stated at cost less accumulated amortization. Amortization based on the estimated useful life of the asset is calculated as follows:
Equipment - 30 % diminishing balance basis
Furniture and fixtures - 20 % diminishing balance basis
Leasehold improvements - 10 years straight line basis
Computer software - 100 % diminishing balance basis
Amortization of capital assets acquired during the year is calculated at one half rates. |
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Computer Equipment Located at Universities
| The cost of acquiring computer equipment provided on at Universities long term loan to universities is expensed when incurred. |
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Revenue Recognition
| The organization follows the deferral method of accounting for contributions. Restricted contributions are recognized as revenue in the year in which the related expenses are incurred. NSERC funding and unrestricted contributions are recognized as revenue when received or receivable if the amount to be received can be reasonably estimated and the collection is reasonably assured.
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Contributions-In-Kind
| No value is ascribed in the Statement of Operations to donated material
and services which are received under the matching provisions of the
agreement with the Natural Sciences and Engineering Research Council of
Canada. |
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Use of Estimates
| The preparation of financial statements in accordance with Canadian generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from management's best estimates, as additional information becomes available in the future.
These estimates and assumptions are reviewed periodically and, as adjustments become necessary, they are reported in the periods in which they become known. |
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Financial Instruments
| All financial assets and liabilities must be classified according to their characteristics, management's intention or the choice of category in certain circumstances. All financial assets must be classified as either held for trading, held to maturity, available for sale or loans and receivables. Financial liabilities must be classified as held for trading or other liabilities. Financial assets and financial liabilities that are purchased and incurred with the intention of generating profits in the near term are classified as held for trading, and are accounted for at fair value with the change in the fair value recognized in the results of operations. Those instruments that have a fixed maturity date, where the organization intends and has the ability to hold to maturity, are classified as held to maturity and accounted for at amortized cost using the effective interest rate method. Loans and receivables are also accounted for at amortized cost using the effective interest rate method. When initially recognized, all financial assets and liabilities are recorded at fair value on the balance sheet. In subsequent periods, financial instruments will be valued at fair value, except for items that are classified in the following categories, which will be measured at amortized cost. These categories are loans and receivables, investments held to maturity and financial liabilities not held for trading purposes.
An allowance for impairment that is other than temporary for financial assets categorized as loans and receivables, and investments held to maturity is recognized in the results of operations.
The organization assesses at each balance sheet date whether a financial asset carried at cost is impaired. If there is objective evidence that an impairment loss exists, the amount of the loss is measured as the difference between the carrying amount of the asset and its fair value. The carrying amount of the asset is reduced and the amount of the loss is recognized in investment income.
The organization purchases some of its equipment in U.S. dollars. A decrease in the value of the Canadian dollar relative to the U.S. dollar could increase the cost of these equipment purchases. The organization mitigates foreign currency risk by purchasing U.S. dollars when initiating a purchase order for equipment being purchased in U.S. dollars.
The organization does not have a significant exposure to any individual customer or supplier.
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