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SAGARIS CORP. <br />NOTES TO FINANCIAL STATEMENTS <br />FOR THE YEAR ENDED DECEMBER 31, 2019 <br />NOTE A -SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES <br />Business Activity <br />The Company performs construction and repairs of major roads, parking lots, sidewalks, curb <br />and gutters, and storm drainage facilities including any excavating, clearing, grading and <br />concrete work necessary and incidental thereto. <br />Management uses estimates and assumptions in preparing these financial statements in <br />accordance with generally accepted accounting principles. Those estimates and assumptions <br />affect the reported amounts of assets and liabilities, the disclosure of contingent assets and <br />liabilities, and the reported revenues and expenses. Actual results could vary from the estimates <br />that were used. <br />Revenue and Cost Recoenition <br />The Company recognizes revenues from fixed-price and modified fixed-price construction <br />contracts on the percentage -of -completion method, measured by the percentage of cost incurred <br />to date to estimated total cost for each contract. That method is used because management <br />considers total cost to be the best available measure of progress on the contracts. Because of <br />inherent uncertainties in estimating costs, it is at least reasonably possible that the estimates <br />used will change within the near term. <br />Contract costs include all direct material and labor costs and those indirect costs related to <br />contract performance, such as indirect labor, supplies, tools, repairs, and depreciation. Selling, <br />general, and administrative costs are charged to expense as incurred. Provisions for estimated <br />losses on uncompleted contracts are made in the period in which such losses are determined. <br />Changes in job performance, job conditions, and estimated profitability may result in revisions <br />to costs and income, which are recognized in the period in which the revisions are determined. <br />The asset, "Costs and estimated earnings in excess of billings on uncompleted contracts," <br />represents revenues recognized in excess of amounts billed. The liability, "Billings in excess of <br />costs and estimated earnings on uncompleted contracts," represents billings in excess of <br />revenuesrecognized, <br />