2020-159A - Laserfiche WebLink

Home Browse Search

PROSHOT CONCRETE, INC. AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2019 AND 2018 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES — CONTINUED Cash and Cash Equivalents For purposes of the consolidated statements of cash flows, the Company considers all highly liquid debt instruments purchased with an original maturity of three months or less to be cash equivalents. Contract Receivables Contract receivables are recorded when invoices are issued and are presented in the consolidated balance sheets net of the allowance for doubtful accounts. Contract receivables 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. As of December 31, 2019 and 2018, the Company does not consider an allowance for doubtful accounts necessary for existing receivables. Property and Equipment Property and equipment is stated at historical cost. The Company's assets are being depreciated using the straight line method over the useful lives of the assets which range from five to forty years. Income Tax Status Proshot, with the consent of its stockholder, has elected under the Internal Revenue Code to be an S corporation. In lieu of corporation income taxes, the stockholder of an S corporation is taxed on his proportionate share of the Proshot's taxable income. Therefore, no provision or liability for federal income taxes has been included in the consolidated financial statements. RE, LLC and PC, LLC, are not taxpaying entities for federal income tax purposes, and thus no income tax expense has been recorded in these financial statements. Income of these entities is taxed to the stockholder in his individual return. The Company has filed tax returns for all years through December 31, 2018. Concentrations and Credit Risks The Company's credit risks primarily relate to cash and cash equivalents and contract receivables. The Company maintains cash and cash equivalents at various financial institutions. Accounts at each institution have insurance with the Federal Deposit Insurance Corporation (FDIC) up to an aggregate of $250,000. For the years ended December 31, 2019, one customer accounted for 10% of contract revenue (two customers accounted for 28% at December 31, 2018). At December 31, 2019, two customers accounted for 45% of total contract receivables, and two customers accounted for 34% of total contract receivables at December 31, 2018. The Company does not require collateral to support contracts receivable. Advertising The Company expenses all advertising costs as they are incurred. Advertising costs were $64,878 and $11,456 for the years ended December 31, 2019 and 2018, respectively. 11