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<br />TENEX ENTERPRISES, IN C. <br />NOTES TO FINANCIAL STATEMENTS <br />FOR THE SIX MONTHS ENDED JUNE 30, 2007 <br /> <br />NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) <br /> <br />Depreciation <br /> <br />Depreciation is provided principally on the straight-line method over the estimated useful lives <br />ofthe assets, which are generally from five to seven years. <br /> <br />Income taxes <br /> <br />Income taxes are provided for the tax effects oftransactions reported in the financial statements <br />and consist of taxes currently due plus deferred taxes related primarily to the difference between <br />the bases of long-term contracts for financial reporting and income tax reporting. The deferred <br />taxes represent the future tax return consequences of those differences, which will either be <br />taxable or deductible when the assets and liabilities are recovered or settled. For tax purposes, <br />the Company uses the cash method of recognizing revenues on long-term contracts. The bases <br />of long-term contracts for financial reporting, exceed the tax bases. The excess will be taxable <br />when the contracts receipts are collected and costs are disbursed. <br /> <br />NOTE B - CONTRACT RECEIVABLES <br /> <br />Contract receivables consist of: <br /> <br />Billed <br />Completed contracts <br />Contracts in progress <br />Retainage <br />Other short tern1 jobs <br /> <br />$ 118,064 <br />930,021 <br />541,801 <br />435.638 <br />$ 2.025.524 <br />