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9 <br />PERSONS SERVICES CORP. <br />NOTES TO FINANCIAL STATEMENTS <br />DECEMBER 31, 2022 <br />NOTE A – HISTORY OF ORGANIZATION <br />Persons Services Corp. (the Company) was formed on January 1, 2000, under the laws of the state of Alabama. <br />On January 1, 2018, the company elected to convert from a Limited Liability Company to a S Corporation. <br />The primary business activity of the Company is the performance of plumbing, construction services, and disaster <br />reconstruction services mainly in Southeastern United States. The Company’s headquarters is located in Mobile, <br />Alabama. <br />NOTE B – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES <br />Cash and cash equivalents <br />Cash and cash equivalents include cash on hand, demand deposits with banks and all highly liquid investments <br />with original maturities of three months or less. The Company also considers investments in money market <br />funds to be cash equivalents. <br />Revenue and Cost Recognition <br />The construction of industrial, commercial and disaster recovery contracts are considered single performance <br />obligations that are satisfied over time. Payment is also due over time in installments, based on project phases as <br />specified in the contracts, with a final payment due at the time the contracts are completed, and the customer <br />accepts the property. <br />The Company recognizes revenues from fixed-price and modified fixed-price industrial and commercial <br />construction contracts using the cost-to-cost input method, which measures progress toward completion based <br />on the percentage of cost incurred to date to estimated total cost for each contract. Contract costs inputs include <br />all direct material and labor costs and those indirect costs related to contract performance, such as indirect labor, <br />supplies, tools, and repairs. Costs of inefficiencies or wasted resources (material or labor) are excluded when <br />measuring progress and are expensed as incurred. <br />Revenue from disaster recovery contracts with fixed-priced and modified fixed-price terms are also recognized <br />using the cost-to-cost input method. However, the costs of administration and supervision and other indirect <br />costs are excluded from measuring the progress toward completion. <br />Management believes the methods selected represent the best proxies available to measures the progress toward <br />completion of contracts. <br />Because of inherent uncertainties in estimating costs, it is at least reasonably possible that estimates used will <br />change within the near term. <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.