Academy of Motion Picture Arts and Sciences and its affiliates

6–35 Report of Independent Auditors To the Board of Governors and Management of the Academy of Motion Picture Arts and Sciences We have audited the accompanying consolidated financial statements of the Academy of Motion Picture Arts and Sciences and its affiliates (the "Academy"), which comprise the consolidated statements of financial position as of June 30, 2020 and 2019, and the related consoli. [...] Use of Estimates The preparation of financial statements 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. [...] The impact (i) may materially affect the ability of the Academy to conduct its operations and/or the cost of operations and (ii) has negatively impacted the financial markets and has and may continue to materially affect the returns on and value of the Academy’s investments. [...] Due to the significant construction component involved in the museum lease and the Academy’s responsibility for all the costs of developing the site, the Academy is deemed the owner of the construction project in accordance with build-to-suit lease accounting guidance. [...] As a result of this interpretation, the Academy classifies as net assets with donor restrictions the original value of gifts donated to the perpetual endowment, the original value of subsequent gifts to the perpetual endowment, and accumulations to the perpetual endowment made in accordance with the direction of the applicable donor gift instrument at the time the accumulation is added to the fund.