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PERSONS SERVICES CORP. NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2022 NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) 11 Use of Estimates The Company uses estimates and assumptions in preparing financial statements in accordance with generally accepted accounting principles. Those estimates and assumptions affect the reported amounts of assets and liabilities, the disclosures of contingent assets and liabilities and the reported revenues and expenses. Actual results could vary from the estimates that were used. Contract Receivables For financial reporting purposes, the Company uses the allowance method of accounting for doubtful accounts. After review of the accounts receivable aging by management, a provision for uncollectible accounts in the amount of $325,000 has been recorded. Goodwill The Company has elected to adopt the private company option to amortize goodwill. Goodwill is subject to amortization over a 10-year life. 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 their 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. The Company’s policy is to capitalize acquisitions costing $5,000 or more. Depreciation expense for the year ended December 31, 2022, was $1,109,888. 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 not accrue for compensated absences because the amount of the obligation cannot be reasonable estimated. Advertising The Company expenses advertising costs as they are incurred. Advertising expenses were $278,989 for the year ended December 31, 2022.