B2W Flipbooks

Page | 53 Sample Note Disclosures > NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Contract Receivables Contracts receivables are carried at the outstanding amount due less an allowance for doubtful accounts, if an allowance is deemed necessary. Allowances for doubtful accounts are established when there is a basis to doubt the full collectability of the contracts receivable. On a periodic basis, the company evaluates its contracts receivable and determines the requirement for an allowance, based on its history of past write-off s, collections and current conditions. When a contract receivable is ultimately determined to be uncollectible and due diligence for collections has taken place, the contract receivable is written off . Revenue and Cost Recognition In the process of performing its construction contracts with its customers, the Company considers each contract to be one performance obligation, unless the circumstances dictate otherwise. Revenue is recognized as the work is performed over time and it is arrived at by determining the amount of cost incurred as it relates to total estimated cost after giving eff ect to the most recent estimates of cost to complete. Combined Contract The Company evaluates whether two or more contracts should be combined and accounted for as one single contract and whether the combined or single contract should be accounted for as more than one performance obligation. This evaluation requires signifi cant judgment and the decision to combine a group of contracts or separate the combined or single contract into multiple performance obligations could change the amount of revenue and profi t recorded in a given period. Uninstalled Materials When the Company determines there are uninstalled materials on a contract, the Company recognizes revenue for the transfer of the goods but only in an amount equal to the cost of those goods. In those circumstances, the Company excludes the costs of the goods from the cost-to-cost calculation to be consistent with the cost-to-cost methodology. Multiple Performance Obligations Some of the Company's contracts have multiple performance obligations, most commonly due to the contract covering multiple phases of a project (design, construction, operational management and maintenance). For contracts with multiple performance obligations, the Company allocates the contract's transaction price to each performance obligation using the Company's best estimate of the standalone selling price of each distinct good or service in the contract. CONSTRUCTION COMPANY, INC. Sample Footnotes - Revenue Recognition, ASC 606 (Note the examples are based on a single year fi nancial statement presentation)

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