2021-207A - Laserfiche WebLink

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FERREIRA CONSTRUCTION COMPANY INC., AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Note 2 - Related Party Transactions - Early Adoption of ASU 2018-17: In the prior year, the Company elected to early adopt ASU 2018-17, Targeted Improvements to Related Party Guidance for Variable Interest Entities, which allows private companies to elect not to 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. The Company leases its office, shop, and storage facility from Tannery Row, LLC and leases its California Office from TAN Ferreira, LLC. These companies are owned by the members of Ferreira Construction Co, Inc., and the leasing transactions qualify the related entity as a VIE. Tannery Row and TAN Ferreira are considered VIEs under generally accepted accounting principles, for which the Company is the primary beneficiary, but are not consolidated in the accompanying financial statements in accordance with the early adoption of this accounting principle. The Company has two additional affiliates, American Pile and Foundation, LLC and Vanguard Energy Partners, LLC, referred to below as the "Pile" affiliate and the "Energy" affiliate, which are not consolidated in accordance with the early adoption of ASU 2018-17. The Pile affiliate and Energy affiliate are under common control and the Company is the primary beneficiary. The Pile affiliate periodically performs work as a subcontractor for the Company. Both affiliates guarantee the Company's line of credit (see Note 14). At December 31, 2020, the following amounts were due from the Pile and Energy affiliates: Balance Sheet Caption Asset (Liability) Due from Affiliate $ 350,000 Due to Affiliate (113,500) Contract Receivables 3,423,791 Accounts Payable (debit) 1,883,783 Net Due from Affiliates $ 5,544,074 Total revenue from the Pile affiliate on work they performed as a subcontractor to the Company were $27,796,772 for the year ended December 31, 2020. The Energy affiliate did not perform any work as a subcontractor for the Company for the year ended December 31, 2020. Note 3 - Fair Value Measurements: Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) 820, "Fair Value Measurements" FASB ASC 820, established a framework for measuring fair value. That framework provides a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (level I measurements) and the lowest priority to unobservable inputs (level 3 measurements). The carrying amounts of cash and equivalents, accounts receivable and accounts payable included in the accompanying balance sheets approximated fair value at December 31, 2020. These assets and liabilities are not presented in the following tables. The three levels of the fair value hierarchy under FASB ASC 820 are described as follows: Level 1 - Inputs to the valuation methodology are unadjusted quoted prices for identical assets or liabilities in active markets that the Company has the ability to access. Level 2 - Inputs to the valuation methodology include: 11