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NOTE B – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Property and Equipment Property and equipment items are carried at cost. Maintenance and repairs are charged to expense as incurred and renewals and betterments are capitalized. Depreciation is charged to income on a basis considered adequate to amortize the related costs over t heir estimated useful lives, using the straight -line method. Estimated useful lives are principally as follows: machinery and equipment, 7 to 10 years; furniture and fixtures, 7 to 10 years; vehicles and other, 5 years; leasehold improvements, 20 years. Th e Company’s policy is to capitalize acquisitions costing $5,000 or more. Depreciation expense for the year ended December 31, 2023, was $1,432,712. The net gain or loss on items retired or otherwise disposed of is credited or charged to operations and the cost and accumulated depreciation are removed from the accounts. Accrued Compensated Absences The Company does accrue for compensated absences (vacation only) which is maintained by the Human Resources department. The calculation is updated at the end of each quarter as needed. Advertising The Company expenses advertising costs as they are incurred. Advertising expenses were $519,946 for the year ended December 31, 2023. Income Taxes The Company elected to be treated as an S corporation effective January 1, 2018. An S corporation is not a taxpaying entity for federal or state income tax purposes. Accordingly, no income tax expense has been recorded in the statements. All income or losses will be reported on the individual shareholders’ income tax returns. As of December 31, 2023, the Company had no uncertain tax positions that require either recognition or disclosure in the Company’s financial statement. NOTE C – CONCENTRATION OF CREDIT RISK Financial instruments, which potentially subject the Company to concentrations of credit risk, consist principally of cash and contract receivables. The Company maintains a portion of its cash in bank deposit accounts at financial institutions. The balances, at times, may exceed federally insured limits. The Company, in the normal course of business, operating primarily in the southeastern region of the United States, extends credit to its customers based on various terms. The Company had outstanding receivables from businesses in this area of $38,279,433 as of December 31, 2023. 12