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MANCIL'S TRACTOR SERVICE, INC. <br /> Notes to Financial Statements <br /> December 31, 2013 <br /> NOTE 1: NATURE OF THE ORGANIZATION <br /> Mancil's Tractor Service, Inc. (the "Company") was incorporated on November 17, 1994, under the <br /> laws of the State of Florida as an "s" corporation. The Company is engaged as a contractor and <br /> subcontractor for site work and land clearing performed on residential and commercial property in the <br /> state of Florida. The Company's operations also include rock and fill sales, material delivery and <br /> machine labor to customers. All site and land clearing work is performed under fixed-price and cost <br /> plus contracts. Rock and fill sales, material delivery and machine labor sales are not performed under a <br /> signed contract. The customers are charged an agreed upon price based upon hourly rates and material <br /> costs for these sales. <br /> NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES <br /> Operating Cycle <br /> The length of the contracts varies but is typically between one and two years. In accordance with normal <br /> practice in the construction industry, the Company includes asset and liability accounts relating to <br /> construction contracts in current assets and liabilities even when such amounts are realizable or payable <br /> over a period in excess of one year. <br /> Cash and Cash Equivalents <br /> For purposes of the balance sheet and statement of cash flows,the Company considers demand deposits <br /> with banks, certificates of deposit, money market funds and all highly liquid investments purchased with <br /> an initial maturity of three months or less to be cash equivalents. <br /> Investments <br /> Investments are classified as held to maturity and recorded at amortized cost. Realized gains or losses <br /> resulting from the sale of investments are determined using the specific identification method. <br /> Use of Estimates <br /> Management uses estimates and assumptions in preparing financial statements in accordance with <br /> accounting principles generally accepted in the United States of America. Those estimates and <br /> assumptions affect the reported amounts of assets, liabilities, the disclosure of contingent assets and <br /> liabilities, and the reported revenues and expenses. Significant estimates inherent in these financial <br /> statements include estimates related to long-term construction contracts(including estimated gross profit <br /> and the percentage-of-completion) and valuations of accounts receivable. Actual results could differ <br /> from the estimates that were used. <br /> - 9- <br />