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OHL USA, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2020 Note 2 - Summary of Significant Accounting Policies (cont'd.) Revenue and Cost Recognition (cont'd.) Contracts for Sale of Goods Community also recognizes revenues for the sale of goods at a point in time, following the transfer of control of the goods to the customer, which typically occurs upon delivery of the goods to the customer. Revenues from the sale of goods, net of cash discounts plus sales tax, are included in sales revenues. Community sells aggregate asphalt, mixed asphalt and liquid material to customers on location at Community's asphalt plants, which are located in West Palm Beach, Miami -Dade and Vero Beach. Payment from the customer is due as the material is delivered, by cash, credit card or certified checks, and includes sales tax which is assessed and recorded at the time of the sale. Practical Expedients and Exemptions The Company utilizes certain practical expedients and exemptions as follows: In cases where the Company has an unconditional right to consideration from a customer in an amount that corresponds directly with the value of the performance completed to date, the Company recognizes revenue in the amount to which there is a right to invoice for services performed. The contract price is not adjusted For the effects of a significant financing component if the Company expects, at contract inception, that the period between when the Company transfers a service to a customer and when the customer pays for that service will be one year or less. Incremental customer contract acquisition costs are expensed as they are incurred when the amortization period is less than one year. Contract Assets and Liabilities Billing practices are governed by the contract terms of each project based upon costs incurred, achievement of milestones, or predetermined schedules. Billings do not necessarily correlate with revenue recognized over time using the percentage -of -completion method. Contract assets include unbilled amounts typically resulting from revenue under long-term contracts when the percentage -of -completion method of revenue recognition is utilized and revenue recognition exceeds the amount billed to the customer. Contract liabilities consist of advance payments and billings in excess of revenue recognized as well as deferred revenue and accrued losses on uncompleted contracts. The Company's contract assets and liabilities are reported in a net position on a contract -by - contract basis at the end of each reporting period. In accordance with normal construction industry practice, the Company includes in current assets and current liabilities amounts relating to construction contracts realizable and payable over a period in excess of one year. 13