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TIMOTHY ROSE CONTRACTING, INC. <br />NOTES TO FINANCIAL STATEMENTS <br />DECEMBER 31, 2007 <br />NOTE 1: SUMMARY OF SIGINFICANT ACCOUNTING POLICIES <br />General <br />Timothy Rose Contracting, Inc. (the "Company") incorporated in Florida <br />and began business in 1991. The Company is engaged in site clearing <br />and paving for commercial projects for private industry and for municipal <br />agencies in Florida. <br />Revenue and Cost Recognition <br />Revenues from fixed price and modified fixed price construction contracts <br />are recognized on the percentage of completion method, measured by <br />the percentage of cost incurred to date to estimated total cost for each <br />contract. <br />Contract costs include all direct materials, direct labor costs, <br />subcontractor costs and those indirect costs related to contract <br />performance, such as indirect labor, contract supervision and support <br />costs, equipment cost allocations, supplies, tools, repairs and <br />depreciation. General and administrative costs are charged to expense <br />as incurred. Changes in job performance, job conditions, and estimated <br />profitability may result in revisions to costs and income, which are <br />recognized in the period in which the revisions are determined. Changes <br />in estimated job profitability resulting from job performance, job <br />conditions, claims, change orders, and settlements are accounted for as <br />changes in estimates in the current period. <br />Estimates <br />The preparation of financial statements in conformity with generally <br />accepted accounting principles requires management to make estimates <br />and assumptions that affect the reported amounts of assets and liabilities <br />and disclosures of contingent assets and liabilities at the date of the <br />financial statements, and the reported amounts of revenues and <br />expenses during the reporting period. Actual results could differ from <br />those estimates. <br />Concentration of Credit Risk <br />Financial instruments that potentially subject the Company to credit risk <br />consist principally of cash and contract receivables. During the year, the <br />Company maintained cash balances that exceeded federally insured <br />limits. <br />Iq <br />