No t e s t o Co n s o l i d a t e d F i n a n c i a l S t a t eme n t s J u n e 3 0 , 2 0 2 3 a n d 2 0 2 2 Contributions to be received more than one year in the future are discounted based on a risk-adjusted discount rate. Amortization of the discount is recorded as contribution revenue and used in accordance with donor-imposed stipulations, if any. Any additional allowance made for uncollectible contributions is based on management’s judgment, past collection experience, and other relevant factors. Contributions of nonfinancial assets (such as land, buildings, equipment, or use thereof, materials and supplies, intangible assets or services) meeting criteria established by the university are recognized at fair value. For the fiscal years ended June 30, 2023 and 2022, such contributions were individually, and in the aggregate, immaterial to the university’s consolidated financial statements and therefore have not been recognized therein. Government Grants Revenue from grants is recognized as the related expenses are incurred. Grant revenue recognized and expended within the same fiscal year is included as revenue with donor restrictions and net assets released from restrictions in the accompanying Consolidated Statements of Activities. Leases NSU recognizes and measures its leases in accordance with FASB Accounting Standards Codification (ASC) Topic 842, Leases. The university is the lessee of property and equipment under operating and finance leases. Upon execution of a new contract, NSU determines whether an arrangement is or contains a lease. Right-of-Use assets represent NSU’s right to use leased assets over the term of the lease. Lease liabilities represent NSU’s contractual obligation to make lease payments over the lease term. Right-of-use assets and lease liabilities are measured, categorized, and recognized at lease commencement. The commencement date is when the university either takes possession of the asset, or in the case of real estate leases, when the landlord makes the building available for use. Operating leases as lessee are included in operating lease right-of-use assets and operating lease liabilities on the Consolidated Statements of Financial Position. The assets and liabilities associated with finance leases are included within land, buildings, and equipment, net and other liabilities, respectively, on the Consolidated Statements of Financial Position. NSU has elected not to recognize right-of-use assets and obligations for leases with an initial term of twelve months or less, as well as certain leases consisting of generally low value (under $5,000) equipment. To the extent a lease arrangement includes both lease and non-lease components, the components are combined as one component. Operating and finance lease right-of-use assets and associated lease liabilities are recognized based on the present value of future minimum lease payments to be made over the expected lease term. NSU uses the rate implicit in a lease, if it is determinable. When the rate implicit in the lease is not determinable, NSU uses its incremental borrowing rate as of the commencement date to determine the present value of the lease payments. The lease term may include renewal or extension options to the extent they are reasonably certain to be exercised; this assessment is made at lease commencement. Lease expense for lease payments is recognized on a straight-line basis over the lease term. Interest expense is recognized as a component of the lease payment for finance leases. Variable lease payments that do not depend on an index or rate are expensed as incurred (such as the pro rata share of actual real estate taxes, insurance, and common area maintenance costs associated with real estate leases). The university leases property, primarily space within university facilities, under agreements that are classified as operating leases. The university’s lessor arrangements are all operating leases and do not include any sales-type or direct finance leases. Property leased to others is included in land, buildings, and equipment, net on the Consolidated 20
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