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r De la Hoz Builders, Inc. Nates to Financial Statements Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Revenues from Contracts with Customers and Disaggregation of Revenues The Company recognizes contract revenue for fixed-price contracts for financial reporting over time. Progress toward completion of the Company's contracts is measured by the percentage of cost incurred to date to management's estimated total costs for each contract. That method is used because management considers total cost to be the best available measure of progress on the contracts. These contracts require estimates to determine the appropriate cost and revenue recognition. Because of the inherent uncertainties in estimating costs, it is at least reasonably possible that the estimates used will change within the near term. Current estimates may be revised as additional information becomes available. Contract costs include all direct material, subcontract, and labor costs and those allocable costs related to contract performance, such as indirect labor, supplies, tools, repairs, and depreciation costs. Costs of inefficiencies or wasted resources (material or labor) are excluded when measuring progress and are expensed as incurred. General and administrative costs are charged to expense as incurred. Provisions for estimated losses on uncompleted contracts are made in the period in which such losses are determined. Changes in job performance, job conditions, and estimated profitability may result in revisions to costs and income, which are recognized in the period in which the revisions are determined. Changes in estimated job profitability resulting from job performance, job conditions, contract penalty provisions, claims, change orders, and settlements are accounted for as changes in estimates in the current period. An amount equal to contract costs attributable to claims is included in revenues when realization is probable and the amount can be reliably estimated. The asset, "contract assets" represents revenues calculated on the percentage -of completion method recognized in excess of amounts billed. The liability, "contract liabilities,° represents amounts billed in excess of revenues recognized on the percentage -of -completion method. The following table is a further breakdown of the types of contracts that make up revenues: For the year ended December 31, 2020 Federal Contracts $ 4,070,083 Local Government Contracts 412,537 Private contracts 191,134 Total $ 4,673,754 Advertising The Company expenses advertising costs as they are incurred. $1,725 related to advertising for the year ended december 31, 2020.