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FERREIRA CONSTRUCTION COMPANY INC., AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (salaries) of $269,650. The amount recorded represents 100% of the amount borrowed. The Company has considered the impact of future governmental audits and the related impact of the income recorded and has adequate documentation to support this conclusion. In addition, the Company has elected under the CARES act to defer the employer portion of the FICA tax that was payable through December 31, 2020. Under the deferral, the Company will pay the deferred amounts at 50% on December 31, 2021 and 50% on December 31, 2022. Concentration of Credit Risk - Cash balances are maintained in financial institutions which are insured by the Federal Deposit Insurance Corporation up to $250,000 each for interest bearing accounts and unlimited for non-interest bearing accounts. At times, such balances may be in excess of the FDIC insurance limit. Income Taxes - The Company has elected under the Internal Revenue Code and under various states to be taxed as an S Corporation. Under these provisions, all earnings and losses of the Company for Federal and various states income tax reporting purposes are reported on the income tax returns of the shareholder. Accordingly, no provision has been made for Federal income taxes. The Company continues to be subject to various state income taxes at a reduced rate and for New York City income taxes. As of December 31, 2020, income taxes that remain subject to examination are all years after December 31, 2016 for Federal purposes and after December 31, 2016 or 2015 for most state and local income tax jurisdictions, except for Rhode Island which is after December 31, 2017. Change in Accounting Principle - The Company has elected to early adopt ASU 2018-17, Targeted Improvements to Related Party Guidance for Variable Interest Entities. This update allows private companies to elect to not apply VIE guidance to legal entities under common control if both the parent and legal entity being evaluated for consolidation are not public business entities. See Note 2. Recent Accora:ting Pronouncements - In February 2016, the FASB issued ASU No. 2016-02, "Leases (Topic 842)," which replaces the existing guidance in ASC 840 — Leases. This ASU requires a dual approach for lessee accounting under which a lessee would account for leases as finance leases or operating leases. Both finance leases and operating leases will result in the lessee recognizing a right -of -use asset and a corresponding lease liability. For finance leases, the lessee would recognize interest expense and amortization of the right -of -use asset and for operating leases, the lessee would recognize a straight-line total lease expense. This ASU is effective for fiscal years beginning after December 15, 2021. The requirements of this standard include a significant increase in required disclosures. The Company is currently evaluating the impact of this adoption on its consolidated financial statements. Subsequent Events - Management has reviewed and evaluated all events and transactions from December 31, 2020 through March 29, 2021, the date that the financial statements were available for issuance. The effects of those events and transactions that provide additional pertinent information about conditions that existed at the balance sheet date, have been recognized in the accompanying financial statements. In March 2020, the World Health Organization declared a novel strain of coronavirus ("COVID-19") a global pandemic which caused significant business disruptions in the United States. Additionally, given the uncertainty of any future business disruption relating to another surge of COVID-19 such disruption could have a material adverse effect on the results of operations, financial position and cash flows. Notwithstanding, the Company continues to monitor regional developments and proceeds with proactive strategies to minimize any impact to its current and future operations. 10