U.S. - Japan Council
Financial Statements For The Year Ended
December 31, 2010 and Independent
Auditors' ReportINDEPENDENT AUDITORS’ REPORTBoard of Directors
U.S.-Japan Council
We have audited the accompanying statement of financial position of U.S.-JapanCouncil (a nonprofit corporation) as of December 31, 2010, and the related statementsof activities, cash flows and functional expenses for the year then ended. These
financial statements are the responsibility of the Organization’s management. Our
responsibility is to express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with auditing standards generally accepted in theUnited States. Those standards require that we plan and perform the audit to obtainreasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting theamounts and disclosures in the financial statements. An audit also includes assessing
the accounting principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We believe that our audit
provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material
respects, the financial position of U.S.-Japan Council at December 31, 2010, and thechanges in its net assets and cash flows for the year then ended in conformity withaccounting principles generally accepted in the United States.

March 1, 2011

U.S.-JAPAN COUNCIL
STATEMENT OF FINANCIAL POSITIONDECEMBER 31, 2010ASSETS
CURRENT ASSETS:
Cash and cash equivalents
Time certificates of deposit
Grants and pledges receivable
Prepaid expenses
Total current assets
PROPERTY AND EQUIPMENT, net ofaccumulated depreciation

Notes

22$

2,3

DEPOSITSTOTAL ASSETS

Temporarily
Restricted

Unrestricted296,178
10,1794,500
6,818
317,675$

14,156

Total$

14,156

310,334
10,1794,500
6,818
331,831

392

392

3,300

3,300

$

321,367$

19,07025,0001,161
11,532
56,763$

14,156$

335,523$

0

19,07025,0001,161
11,532
56,763

278,760

LIABILITIES AND NET ASSETSCURRENT LIABILITIES:
Accounts payable
Deferred revenue
Accrued expenses
Accrued vacation
Total current liabilities

2

COMMITMENTS

4

NET ASSETS

2TOTAL LIABILITIES AND NET ASSETS

See notes to financial statements.

$264,604$

14,156321,367$

14,156$335,523

U.S.-JAPAN COUNCIL
STATEMENT OF ACTIVITIESFOR THE YEAR ENDED DECEMBER 31, 2010

Notes
SUPPORT AND REVENUE:
Support:Donations
Revenue:
Programs
FundraisingInterest income
In-kind contributions
Other income
Net assets released from restriction:
Restriction satisfied by performance
Total support and revenue

2

Temporarily
Restricted

Unrestricted$408,642$

25,000Total$

331,877
25,25015529,233
50
2433,642
331,877
25,250155
29,23350

10,844806,051(10,844)
14,156820,207

FUNCTIONAL EXPENSES (see statement of functional expense):
Program services
Management and generalFundraising
Total functional expenses

546,370
73,15773,618693,1450546,370
73,15773,618693,145

Change in net assets

112,906

14,156

127,062

NET ASSETS, DECEMBER 31, 2009

151,698

0151,698

NET ASSETS, DECEMBER 31, 2010

See notes to financial statements.

$

264,604$

14,156$

278,760

U.S.-JAPAN COUNCIL
STATEMENT OF CASH FLOWSFOR THE YEAR ENDED DECEMBER 31, 2010
INCREASE IN CASH AND CASH EQUIVALENTS
CASH FLOWS FROM OPERATING ACTIVITIES:
Increase in net assets
Adjustments to reconcile increase in net assets to net cash
provided by operating activities:
Depreciation and amortization
Changes in:
Grants and pledges receivable
Receivable, otherPrepaid expenses
Deposits
Accounts payable
Deferred revenue
Accrued expenses
Accrued vacations
Net cash provided by operating activities$127,062

92(3,500)
1,017(4,114)(1,000)16,59625,000(2,688)
1,678
160,143

CASH FLOWS FROM INVESTING ACTIVITIES:
Increase in time certificates of deposit(111)

NET INCREASE IN CASH AND CASH EQUIVALENTS

160,032

CASH AND CASH EQUIVALENTS, JANUARY 1, 2010

150,302

CASH AND CASH EQUIVALENTS, DECEMBER 31, 2010

See notes to financial statements.

$310,334

U.S.-JAPAN COUNCILNOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2010

1. GENERALThe U.S.-Japan Council (USJC) is a nonprofit, public benefit corporation incorporated in thestate of California in December 2008 to promote people-to-people relations on national andcommunity levels between the United States of America and Japan. The USJC has offices inWashington, DC and Los Angeles, California with operations commencing in April 2009.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIESThe accompanying financial statements have been prepared on the accrual basis ofaccounting in accordance with generally accepted accounting principles.
Recognition of donor restrictions - Contributions received are recorded as unrestricted ortemporarily restricted support depending on the existance or nature of donor restrictions. The
two net asset classes are based solely on the existance or absence of donor-imposedrestrictions.
a. Permanently restricted net assets result from contributions whose use is limited bydonor-imposed stipulations that neither expire by the passage of time nor can befulfilled or otherwise removed by USJC's actions. USJC currently has no permanently
restricted net assets.
b. Temporarily restricted net assets result from contributions whose use is limited by donorimposed stipulations that either expire by passage of time or can be fulfilled and removedby actions of USJC pursuant to these stipulations. The net assets may be temporarily
restricted for various purposes, such as use in future periods or use for specific purposes.
USJC currently has no temporarily restricted net assets.
c. In the absence of donor-imposed restrictions, net assets are classified as unrestricted.
Cash and cash equivalents - USJC considers highly liquid investments with a maturity of threemonths or less when purchased to be cash equivalents. USJC maintains its cash in bankdeposit accounts which, at times, may exceed the federally insured limits. USJC believes it isnot exposed to any significant credit risk on these cash deposits.
Property and equipment - Property and equipment are stated at cost or, if donated, at theapproximate fair value at the date of donation. Depreciation is determined on the straight-line
method over the estimated useful lives of the assets. Repairs and maintenance are charged
as expense when incurred.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Income taxes - The Internal Revenue Service has classified the organization as exempt fromfederal income taxes under Section 501(c)(3) of the Internal Revenue Code. Under thestatute of limitations, USJC is open to examination by the Internal Revenue Service for theyear ended December 31, 2009.
Deferred revenue - Deferred revenue represents temporarily restricted funds received from
grantors and foundations that are received in advance and will benefit subsequent periods.
Functional expenses - USJC allocates its expenses on a functional basis among its various
programs and support services. Expenses that can be identified with a specific program andsupport service are allocated directly according to their natural expenditure classifications.
Other expenes that are common to several functions are allocated by direct labor costs.
In-kind contributions - The Terasaki Foundation provided the Los Angeles office space to theUSJC during the year. Based on fair market value provided by the Terasaki Foundation,
approximately $7,100 of in-kind donations are included in revenues and expenses in thefinancial statements. In-kind donations also includes donations of other rental space, foodand beverages for meetings and receptions.
Use of estimates - Management uses estimates and assumptions in preparing its financialstatements. Those estimates and assumptions affect the reported amounts of assets andliabilities, the disclosure of contingent assets and liabilities, and the reported public support
revenues and expenses. Actual results could differ from those estimates and assumptions.
Accounting Standards Codification - Effective September 30, 2009, the Financial AccountingStandards Board ("FASB") established the FASB Accounting Standards Codification ("ASC")as the source of authoritative accounting to be applied by nongovernmental entities in the
preparation of financial statements in conformity with accounting principles generally acceptedin the United States. Exempt for newly issued standards that have not been codified,references to codified have been updated to reflect this change. Adoption of the ASC did nothave an impact on the USJC's statement of financial position, statement of activities or cashflows.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Fair Value of Financial Instruments - Fair Value Determination - The fair value of the USJC'sfinancial instruments as of December 31, 2010 represent management's best estimates of theamounts that would be received to sell those assets in an orderly transaction between marketparticipants at that date. Those fair value measurements maximize the use of observable
inputs. However, in situations where there are little, if any, observable inputs, management's
own judgments about the assumptions of market participants were used in pricing the asset.
Those judgments are developed by management based on the best information available inthe circumstances. ASC 820 establishes a fair value hierarchy that prioritizes the inputs tovaluation techniques used for fair value. The hierarchy gives the highest priority to unadjusted
quoted prices in active markets for identical assets or liabilities (Level I measurements) andthe lowest priority to measurements involving significant unobservable inputs (Level IIImeasurements). The three levels of the fair hierarchy are as follows: Level I inputs arequoted prices (unadjusted) in active markets for identical assets that the entity has the ability
to access at the measurement date. Level II inputs other than quoted prices included within
Level I that are observable for the assets, either directly or indirectly, such as quoted prices for
similar assets or liabilities quoted prices in markets that are not active, or other observable
inputs that can be corroborated by observable market data. Level III inputs are unobservable
inputs that are supported by little or no market activity and are significant to the fair value ofthe asset. The level in the fair value hierarchy within which a fair value measurement in its
entirety falls is based on the lowest level input that is significant to the fair value measurement
in its entirety.

3. PROPERTY AND EQUIPMENT
The major classes of property and equipment and the estimated useful lives in computing
depreciation are as follows:

Office equipment
Less accumulated depreciation$Amount634
242$392Lives
3 years

Depreciation expense for property and equipment amounted to $92 for the year.

4. COMMITMENTS
The USJC has a noncancelable lease for its office facilities which expires May 2011. The
minimum future lease payments is $14,850. Rent expense for the year amounted to $46,742,
which includes $7,142 of donated office space.

5. SUBSEQUENT EVENTSUSJC had no reportable subsequent events for the period ended December 31, 2010 throughthe issuance of the financial statements.

U.S.-JAPAN COUNCIL
STATEMENT OF FUNCTIONAL EXPENSES
FOR THE YEAR ENDED DECEMBER 31, 2010

Bank charges
Depreciation
Dues and subscriptions
Events and programs
Employee benefits$Program
Services885
64696
224,1805,585Management
And GeneralFundraising
$
8 $
319 $
1414182
137
15,186
1,195
1,114

Total
1,212
92
1,015
239,366
7,894

Insurance
Meetings
Office supplies
Outside service
Payroll taxes

3,463
2,872
10,98230,30013,758

911
493
929
8,137
3,521

682
458
826
5,493
2,706

5,056
3,823
12,73743,93019,985

PostagePrinting
Professional services
Rent
Salaries

910
1,460
14,54031,919178,447

137
359
4,557
8,612
41,409

137
296
2,604
6,211
33,213

1,184
2,115
21,701
46,742
253,069

Taxes and licenses
Telephone and internet
Travel59
11,92814,322

38
2,151
504

13
2,091
2,118

110
16,17016,944TOTAL$

See notes to financial statements.

546,370$

73,157$73,618$693,145