2014-154A. - Laserfiche WebLink

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MANCIL'S TRACTOR SERVICE, INC. Notes to Financial Statements December 31, 2013 NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Fair Value of Financial Instruments The carrying amount of the Company's financial instruments, including cash, cash equivalents, accounts receivable and accounts payable approximate fair value due to their short-term nature. The carrying amounts of the Company's notes receivable, investments and indebtedness approximate fair value due to the their terms. Contracts Receivable Contracts receivable are recorded when invoices are issued and are presented in the balance sheet net of the allowance for doubtful accounts. Contracts receivable are written off when they are determined to be uncollectible. The allowance for doubtful accounts is estimated based on the Company's historical losses, the existing economic conditions in the construction industry, and the financial stability of its customers. There were no probable uncollectible amounts included in contracts receivable as of December 31, 2013. Property and Construction Equipment Property and construction equipment are stated at cost, net of accumulated depreciation. The cost of fixed assets is depreciated over the estimated service lives of the related assets. Depreciation is computed on the straight-line basis for assets for financial reporting purposes over estimated lives ranging from three to fifteen years. Expenditures for repairs and maintenance are charged to expense when incurred. Expenditures for major renewals and betterments, which extend the useful lives of the existing equipment, are capitalized and depreciated. Upon retirement or disposition of property and equipment, the cost and related accumulated depreciation are removed from the accounts and any resulting gain or loss is recognized in the statement of income. The Company reviews its long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Long-lived assets, which are considered held and used, would be impaired if its carry value exceeds the undiscounted future net cash flows related to the asset. The impairment would be measured by the extent the fair value of the asset does not exceed carrying value. No impairment occurred as of December 31,2013. Depreciation expense for the year ended December 31,2013 was$871,755.. Revenue and Cost Recognition Revenues from fixed-price and modified fixed-price construction contracts are recognized on the percentage-of-completion method, measured by the percentage of costs incurred to date to estimated total costs for each contract. This method is used-because management considers expended costs to be the best available measure of progress on these contracts. Because of the inherent uncertainties in estimating costs, it is at least reasonably possible that the estimates used will change within the near term. Revenue from fixed-price material sale contracts is recognized currently as the service is performed. - 10-