Asg Brooklyn Center

“Component units are legally separate entities for which the academy (primary government) is financially accountable, or for which the exclusion of the component unit would render the financial statements of the primary government misleading. The criteria used to determine if the primary government is financially accountable for a component unit includes whether or not the primary government appoints the voting majority of the potential component unit's governing body, is able to impose its will on the potential component unit, is in a relationship of financial benefit or burden with the potential component unit, or is fiscally depended upon by the potential component unit. Based on these criteria, there is one organization considered to be a component unit of the academy. ASG Brooklyn Center (the building organization) is a Minnesota Nonprofit Organization classified by the Internal Revenue Service (IRS) as a 501(c)(3) tax-exempt organization which owns the real estate and building that is leased by the academy for its operations. The building organization is governed by a separate three member board. Although it is legally separate from the Academy, the building organization is reported as if it were part of the Academy (as a blended component unit) because (1) its sole purpose is to acquire, renovate and own an educational site which is leased to the academy and (2) the expectation for the debt obligations of the building organization to be repaid with the academy's resources under the lease agreement. the building is leased to the academy under the terms of a long-term agreement. All long-term debt related to the purchase of the building and property and all capital assets related to the school site is the responsibility of and will be under the ownership of the building organization. The building organization does not issue separate financial statements.”

“Part X, Line 2: The Building Organization is exempt from Federal and State income taxes under Internal Revenue Code 501(c)(3). Both are subject to tax on income from any unrelated business. On July 1, 2009, the Building Organization adopted the recognition requirements for uncertain income tax positions as required by the Financial Accounting Standards Board (FASB) ASC 740-10 (formerly known as FASB Interpretation NO. 48, Accounting For Uncertainty in Income Taxes), with no cumulative effect adjustment required. Income tax benefits are recognized for income tax positions taken or expected to be taken in a tax return, only when it is determined that the income tax position will more likely-than-not be sustained upon examination by taxing authorities. the building organization has analyzed tax positions taken for filing with the Internal Revenue Service and state jurisdiction where they operate. The Building Organization believes that income tax filing positions will be sustained upon examination and do not anticipate any adjustments that would result in a material adverse affect on their respective financial condition, results of operation or cash flows. Accordingly, the Building Organization has not recorded any reserves, or related accruals for interest and penalties for uncertain income tax positions at June 30,2017 and June 30,2018.”