MASSACHUSETTS CREDIT UNION SHARE INSURANCE CORPORATION AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED SEPTEMBER 30, 2023 AND 2022
N OTE 2 - S UMMARY OF S IGNIFICANT A CCOUNTING P OLICIES (C ONTINUED ) I NSURANCE A SSESSMENTS
During the year, the Corporation recognizes revenue from insurance assessments at the time a member credit union’s assessment payment is received. At September 30, 2023 and 2022, there were $55,093 and $6,294, respectively, of assessments receivable from member credit unions. The amount of the initial assessment is based on the application of 1.25% to excess shares and deposits at the date of approval for insurance. In addition, the Corporation may charge a higher initial assessment up to a maximum of its then current coverage ratio. Beginning January 1, 2019, any initial assessments are increased by a minimum of 0.50%. Currently, the Corporation does not increase initial assessments for credit unions with less than $1,000,000 in excess shares and deposits at the date of approval for insurance. Future assessments are made on the application of 1.25% on any increase in excess shares and deposits. R ENTAL I NCOME Effective October 1, 2022, the Corporation adopted FASB Accounting Standards Codification (“ASC”) 842, Leases . The Corporation determines if an arrangement contains a lease at inception based on whether the Corporation has the right to control the asset during the contract period and other facts and circumstances. The accounting for lessors remains largely unchanged from the old model under ASC 840, Leases ("ASC 840"), with the adoption of ASC 842. The distinction between operating and finance leases is retained but updated to align with certain changes to the lessee model and the new revenue recognition standard (“ASC 606”). The new standard also replaces the sale- leaseback guidance under ASC 840 with a new model applicable to both lessees and lessors. Additionally, the new standard requires extensive quantitative and qualitative disclosures. The Corporation adopted ASC 842, on the lessor side, using the modified retrospective transition method and elected the package of practical expedients, both provided for under ASU 2018-11, Leases (Topic 842): Targeted Improvements. The package of practical expedients allows the Corporation not to reassess whether contracts are or contain leases, lease classification, and whether initial direct costs qualify for capitalization. The adoption of ASC 842 had no cumulative effect on the Corporation’s net assets. Rental income consists of income from leases and from reimbursable expenses from the real estate investment. The Corporation commences rental revenue recognition when the tenant takes possession of the leased space and the leased space is substantially ready for its intended use. The Corporation does not have any percentage rent arrangements with its tenants. Reimbursable costs are included in rental income in the year earned.
15
2023 ANNUAL REPORT 87
Powered by FlippingBook