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PROSHOT CONCRETE, INC. AND SUBSIDIARIES
<br />NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
<br />DECEMBER 31, 2019 AND 2018
<br />1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES — CONTINUED
<br />Contract costs include all direct material and labor costs and those indirect costs related to contract
<br />performance, such as indirect labor, supplies, tools, and repairs. Selling, general, and
<br />administrative costs are charged to expense as incurred. Provisions for estimated losses on
<br />uncompleted contracts are made in the period in which such losses, if any, are determined.
<br />Changes in job performance, job conditions, and estimated profitability may result in revisions to
<br />costs and income, which are recognized in the period in which the revisions are determined.
<br />Changes in estimated job profitability resulting from job performance, job conditions, contract
<br />penalty provisions, claims, change orders, and settlements are accounted for as changes in
<br />estimates in the current period.
<br />For projects in construction as of the consolidated balance sheet dates, the asset "Costs and
<br />estimated earnings in excess of billings" represents revenues recognized in excess of amounts
<br />billed. The liability "Billings in excess of costs and estimated earnings" represents billings in excess
<br />of revenue recognized.
<br />On January 1, 2019, the Company adopted Financial Accounting Standards Board (FASB)
<br />Accounting Standards Codification (ASC) 606 on a modified retrospective basis, which amended
<br />the accounting standards for revenue recognition. As a result, the new guidance was applied
<br />retrospectively to contracts which were not completed as of January 1, 2019. Contracts completed
<br />prior to January 1, 2019, were accounted for using the guidance in effect at that time. The
<br />cumulative effect of applying the new guidance did not have a material adjustment to the opening
<br />balance sheet.
<br />The Company recognizes revenue over four types of streams: Fixed price contracts, maintenance
<br />agreements, subcontracts, and other. Fixed price contracts have signed agreements with stated
<br />contract amounts. Maintenance agreements do not have signed contracts but are recognized when
<br />the Company bills the customer for work performed and are recurring. Subcontracts arise when
<br />another general contractor subcontracts the Company for labor. Other revenue is generally
<br />comprised of one-time, verbal agreements between the Company and a customer and do not have
<br />signed contracts. All streams are recognized over time.
<br />The following presents the Company's revenues disaggregated by revenue source as of
<br />December 31:
<br />Fixed price contracts
<br />Maintenance agreements
<br />Subcontracts
<br />Other
<br />10
<br />2019
<br />$ 9,700,870
<br />3,966,143
<br />4,594,206
<br />856,213
<br />$ 19,117,432
<br />2018
<br />$ 15,640,407
<br />3,360,466
<br />648,688
<br />784,664
<br />$ 20,434,225
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