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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.) Inventories Inventories are valued at the lower of cost or net realizable value, with cost determined using the first -in, first -out method and with market defined as the net realizable value. Net realizable value is the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. Inventories consist of asphalts, diesel fuels, rocks, and shop supplies. Property and Equipment Property and equipment is stated at cost. The costs of additions and betterments are capitalized and expenditures for repairs and maintenance are expensed in the period incurred. When items of property and equipment are sold or retired, the related costs and accumulated depreciation are removed from the accounts and any gain or loss is included in income. Depreciation of property and equipment is provided utilizing both the straight-line and accelerated methods over the estimated useful lives of the respective assets as follows: Building and building improvements 15 to 40 years Transportation equipment 3 to 12 years Machinery and equipment 3 to 15 years Furniture and fixtures 3 to 10 years Office and computer equipment 3 to 10 years Leasehold improvements are amortized over the lesser of the term of the lease or the estimated useful lives of the assets. The Company reviews the carrying value of the long-lived assets to determine if facts and circumstances exist which would suggest that the assets might be impaired. If impairment is indicated, an adjustment will be made to reduce the carrying amount of the long-lived assets to their fair value. Based on the Company's review at December 31, 2020, no impairment of long-lived assets was evident. Investment in Joint Ventures The Company accounts for its investment in its unconsolidated joint ventures on the proportionate consolidation method in accordance with FASB ASC Subtopic 810-10-45, Consolidation. Under the proportionate consolidation method, the Company presents its proportionate share of the unconsolidated joint ventures' assets, liabilities, revenues and expenses on a line -by-line basis and combines the amounts directly with its own assets, liabilities, revenues, and expenses without distinguishing between the amounts related to the Company and those held directly by the joint venture. 19