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C KERNS CONSTRUCTION AND PROPERTY IVIGMNT CORPORATT6N NOTES TO FINANCIAL STATEMENTS December 31, 2014 NOTE 1 - ORGANIZATION Kerns Construction & Property Management, Inc. (Company) is a general contractor specializing in building and concrete construction principally in Florida. The Company was incorporated in Florida in 2007 NOTE 2 - SUMMARYOF SIGNIFICANT ACCOUNTING POLICIES The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates. The Company performs its work under fixed-price and modified fixed-price contracts may be modified by incentive and penalty provisions. The lengths of the Company's contracts vary but are typically less than one year. In accordance with normal practice in the construction industry, the Company includes asset and liability accounts relating to construction contracts, in current assets and liabilities even when such amounts are realizable or payable over a period in excess of one year. Revenues from construction contracts are recognized on the percentage -of -completion method, measured by the percentage of costs incurred to date to estimated total costs for each contract. Revenues from construction claims are recognized when realization is probable and can be reliably estimated. Contract costs include all direct material, labor costs, equipment and those indirect costs related to contract performance, such as indirect labor, supplies, tools, repairs and depreciation costs 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, including those arising from contract penalty provisions and final contract settlements may result in revisions to costs and income and are recognized in the period in which the revisions are determined. The asset "costs and estimated earnings in excess of billings on uncompleted contracts" represents revenues recognized in excess of amounts billed. The liability "billings in excess of costs and estimated earnings on uncompleted contracts" represents billings in excess of revenues recognized. The Company grants credit to customers in the normal course of operations Contract receivables are based on management's evaluation of outstanding receivables at year end. Allowance for doubtful accounts, if any, is provided based on the review of outstanding receivables, historical experience and economic conditions. Uncollectible accounts are expensed in the period such amounts are determined.