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<br /> <br /> <br /> <br /> <br />NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES <br /> <br />Revenue and Cost Recognition (Continued) <br /> <br />Changes in job performance, job conditions, and estimated profitability may result in revisions to costs and <br />income, which are generally recognized in the period in which the revisions are determined. <br /> <br />Changes in estimated job profitability resulting from variable consideration (such as incentives for <br />completing a contract early or on time, penalties for not completing a contract on time, claims for which the <br />Company has enforceable rights, or contract modifications/change orders in which the scope of modification <br />has been approved, but the price has not been determined or approved) are accounted for as changes in <br />estimates in the current period, but limited to an amount that will not result in a signific ant reversal of <br />revenue in future periods. <br /> <br />Provisions for estimated losses on uncompleted contracts are made in the period in which such losses are <br />determined. <br /> <br />Selling, general, and administrative costs are charged to expense as incurred. <br /> <br />The Company generally warranties its work for one year after the date of acceptance. Warranty costs for the <br />year ended December 31, 2023, were immaterial. <br /> <br />The timing of revenue recognition, billings, and cash collections results in billed accounts receivable, <br />unbilled receivables (contract assets), and customer advances and deposits (contract liabilities) on the <br />balance sheet. Amounts are billed as work prog resses in accordance with agreed -upon contractual terms, <br />either at periodic intervals (e.g., monthly) or upon achievement of contractual milestones. Generally, billings <br />from disaster recovery projects occur after revenue recognition, resulting in contract assets. In contrast, <br />billings on industrial and commercial projects generally exceed revenues earned which allow the company <br />to receive advances or deposits from customers, resulting in contract liabilities. Contract assets decline as <br />contracts near completion and work can be invoiced. Contract liabilities are decreased as revenue is <br />recognized and as the contracts near completion. <br /> <br />The contract asset is captioned in the balance sheet as, "costs and estimated earnings in excess of billings <br />on uncompleted contracts." The contract liability is captioned, "billings in excess of costs and estimated <br />earnings on uncompleted contracts." <br /> <br /> <br /> <br /> <br /> <br /> <br /> <br /> <br /> <br /> <br /> <br /> <br />10