Glacier View Road and Recreation Association (the Association) is organized as a not-for–profit corporation in the State of Colorado for the purpose of promoting the general well being of property owners in the Glacier View Development. The Association’s membership consists of property owners with diverse backgrounds from various regions across the United States. The Association controls approximately 3,800 acres containing 985 lots. The significant activities of the Association include the maintenance of roads and grounds and promotion of recreational facilities for property owners and their quests in the development. Funding of the Association’s activities is derived from membership assessments and fees from member services.

The Association owns various common properties, including greenbelts, office building, lake facilities, and the firehouse buildings. The properties, originally contributed by the developer primarily roads and greenbelts, are not reported on the accompanying financial statements

Properties subsequently acquired by the Association are reported at cost less depreciation. These properties include a maintenance shop, office building, greenbelts and firehouse buildings.

The Association is responsible for the repair and maintenance of roadways, the office building, the maintenance shop, the firehouse buildings and the greenbelts. Funding the maintenance is provided by member assessments.

The Association has adopted the reserve method of accounting for uncollectible receivables. When membership dues become delinquent for a substantial period of time, it has been the Associations policy to file liens on the property owner’s real estate located in the development. . Effective January 1, 1994, Colorado statutes have made homeowner association dues an automatic lien against the property with not formal filing required by the Association. Collection efforts may be hindered by bankruptcy proceedings, by security interests subordinated to those of other creditors, and by the relative expense of collection procedures. Allowances for doubtful accounts are based on a review of the status of existing accounts coupled with past collection experience. Billings for annual assessments cover the period from July 1 through June 30. Such billings are recorded as receivables and revenue on July 1 of each operating year. Amounts collected prior to assessment date are recorded as a liability in the account titled "prepaid dues and assessments" on the balance sheet of the Association.

Purchases of property and equipment are recorded at cost except for donated property which is recorded at fair market value on the date acquired.

Depreciation is computed on a straight-line basis over the estimated useful lives of individual assets. In general, property useful lives are as follows:

Development improvements 5-15

Major equipment 5-12

Other equipment 5-12

Vehicles 5

Office equipment and furniture 3-7

For purposes of the statement of cash flows, the Association considers all investment with an initial maturity of three months or less to be cash equivalents.

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results may differ from the estimates.

The Association may elect to be taxes as a Homeowners Association under the provisions of the Internal Revenue Code. Under current regulations, the Association is taxed as a regular corporation unless the annual Homeowner Association election is made.

In any year the election is made to be taxes as a Homeowners Association, membership dues and general operating expenses are not taxable or deductible. Only income for special services received from members and nonmembers, gains on the sale of assets, the expenses related to providing these services, and cost of assets sold are considered in computing taxable income.

Differences in income reported for financial statement purposes and income for income tax purposes may result from the following:

Glacier View Road and Recreation Association and Glacier View Meadows Water and Sewer Association are organizations that consist primarily, but not exclusively, of the Glacier View property owners. The Associations share certain administrative, employee and operating costs. The two associations share joint ownership of several greenbelt areas, within Glacier View developments.

Balance due (to) from Water and Sewer Association at June 30, 2005 $ (1,489).

The original real estate developer has a few properties located within the Association boundary. Because the developer has had no financial interest in the Association activity for several years, he is no longer considered a related party.

As stated in Note 1, the Association may elect in any year to be taxed as a Homeowners Association. This election was made for fiscal years ending, 2005, 2002 and 2001. The Association makes the homeowners election only in these years in which it would create tax savings. The association has incurred income tax expense of $381 for 2005.

The Association has temporary timing differences between its books and tax methods of accounting. These items may create deferred tax liabilities or deferred tax assets. There may be no tax benefit received from the reversal of a timing difference if the timing difference is eliminated in whole or in part in any year that the Association elects to be taxed as a Homeowners Association or is operating at a loss. It is the intent of the Association to make the Homeowners election in those years where it would minimize taxes. Furthermore, the Association has historically operated at a level where it pays little or no income tax. Considering the relevant factors, it is unlikely that the Association will derive any significant future loss of benefit related to deferred taxes. Accordingly, the net deferred tax liability has been fully offset with the value allowance account.

The Glacier View Road and Recreation Association employ certain personnel jointly with the Glacier View Meadows Water and Sewer Association. The following is a summary of employee benefit plans currently in effect:

Vacation leave – The Association presently has a policy that allows full-time employee ten working days annual vacation after one full year of service. After five year of service, employees earn fifteen working days vacation annually and vacation pay is a vested benefit.

Flex days – Full-time employees may accumulate six days of compensated flextime per year of service to the Association. Employees may accumulate a maximum of twenty-five days f unused flextime and flextime is a vested benefit.

Paid holidays – Seven paid holidays per year are paid at regular rate to full-time employees.

Deferred compensation – Employees earning more than $5,000 are eligible to participate in a Simple IRA deferred compensation retirement plan. The Association contributes two percent (2%) of salary for those employees making tax deferred contributions of compensation to the retirement plan.

The developer entered into an agreement with Larimer County whereby the developer pledged certain lots in Glacier View Meadows subdivision filings to secure obligations for subdivision improvements. The developer defaulted on this agreement.

Glacier View Road and Recreation Association and Glacier View Meadows Water and Sewer Association entered into an agreement with Larimer County and the developer. This agreement transferred title to several properties which were pledged to the County under previous agreement. The associations were responsible for completion of the improvements after the sale of the properties, to the extent funds are available from the sales.

As properties are sold by the County, the proceeds are applied as follows:

1. Reimbursements for selling and closing costs.
2. Remaining proceeds are allocated towards the completion.
3. As of June 30, 2002, the SIA management group determined there are sufficient funds set aside for the remaining water and sewer projects. The county reimbursed Glacier View Road and Recreation Association $0 in fiscal year 2005 for prior road projects. Additional reimbursements to the Road and Recreation Association may be received in future fiscal years if funds are available.

Property and equipment are summarized as follows:

Land and improvements $ 34,292

Development improvements 118,619

Buildings and improvements 85,718

Machinery and equipment 163,760

Autos and trucks 58,464

Office furniture and equipment 18,440

Radio equipment 3,896

Total property and equipment 483,189

Less: accumulated depreciation (377,125)

Net property and equipment $106,064

The Association’s governing documents do not require the accumulation of funds to finance future major repairs and replacements. The Board of Directors established a bank account (the replacement fund) to accumulate funds for the estimated costs of future major repairs and replacements, required projects and for the expansion of expansion of existing common property. At June 30, 2005, $83,108 was the replacement fund balance.

The Association’s management conducts an ongoing study to estimate the remaining useful lives and the replacement costs of the components of common property. The Association will fund for such major repairs and replacements over the estimated useful lives of the components based on the study’s estimate of future replacement costs, considering amounts previously accumulated in the replacement fund. Actual expenditures, may vary from the estimated amounts and variations by be material.

The Association has, from time to time, funds deposited in a single financial institution in excess of Federal Deposit Insurance Corporation limits, of $100,000.

During the year ended June 30, 2005, interest paid was $0 and the Association paid $340 in income taxes for the year ended June 30, 2005.

The Association leases a postage meter under an operating lease commencing on December 20, 2003 until February 20, 2009. The cost is shared equally with Glacier View Water and Sewer Association. The following is a schedule by years of future minimum rentals under the lease at June 30, 2005.

Annual cost years ending June 30:

2005     $ 399

2006     532

2007     532

2008     532

2009     133

Total    $2,128