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TIMOTHY ROSE CONTRACTING , INC . <br /> NOTES TO FINANCIAL STATEMENTS <br /> DECEMBER 31 , 2007 <br /> NOTE In SUMMARY OF SIGINFICANT ACCOUNTING POLICIES - CONTINUED <br /> Cash Equivalents <br /> The Company considers securities with maturities of three months or less <br /> to be cash equivalents . <br /> Marketable Equity Securities <br /> The Company has elected to classify its investments in equity securities <br /> as available for-sale securities and report them at fair value , with <br /> unrealized gain or loss excluded from earnings and reported as a <br /> separate component of equity . Under this method , the cost of marketable <br /> securities sold is determined on the average cost method . <br /> Depreciation <br /> Property and equipment are recorded at cost . Depreciation is provided <br /> using accelerated and straight- line methods over the estimated useful <br /> lives ( 5 to 7 years ) of the assets . Expenditures for major renewals and <br /> betterments that extend the useful lives of property and equipment are <br /> capitalized . Expenditures for maintenance and repairs are charged to <br /> expense as incurred . Depreciation expense for the current year totaled <br /> $ 307 , 048 . <br /> Income Taxes <br /> The Company , with the consent of its shareholder , has elected under the <br /> Internal Revenue Code to be taxed as an S Corporation . In lieu of <br /> corporation income taxes , the shareholder of an S corporation is taxed on <br /> the Company ' s taxable income . Therefore , no provision or liability for <br /> federal income taxes has been included in these financial statements . <br /> NOTE 2 : MARKETABLE SECURITIES <br /> Marketable securities consist of available for sale common stock <br /> securities with an unrealized holding loss of $4 , 594 from its cost to fair <br /> value . <br /> NOTE 3 : CONTRACT RECEIVABLES <br /> Contract receivables at December 31 , 2007 , consists of the following : <br /> Contracts in progress $ 1 , 035 , 807 <br /> Retention 1 , 016 , 563 <br /> $2 , 052 , 370 <br /> No allowance for uncollectible accounts has been provided since in <br /> management ' s opinion all accounts receivables are fully collectible . As of <br /> May 15 , 2008 , substantially all of the receivables were collected . <br /> 6 <br />