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<br />NOTE 1. <br /> <br />SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) <br /> <br />Advertising and Promotion <br /> <br />Advertising and promotion costs are charged to operations as incurred and are <br />included in operating expenses in the accompanying statements of income and <br />members' equity. Advertising and promotion expense for the years ended December <br />31, 2009 and 2008, amounted to approximately $4,000 and $32,000, respectively. <br /> <br />Income Taxes <br /> <br />The Company, with the consent of its members, has elected to be treated under S <br />corporation provisions of the Internal Revenue Code. Under these provisions, the <br />taxable income of the Company is reflected on the members' personal income tax <br />returns. Accordingly, no provision for income taxes is included in the accompanying <br />financial statements. <br /> <br />Commencing for 2009, the Company adopted "Accounting for Uncertainties in <br />Income Taxes" as prescribed by the Accounting Standards Codification, which <br />provides guidance for .financial statement recognition and measurement of uncertain <br />tax positions taken or expected to be taken in a tax return for open tax years (generally <br />a period of three years from the later of each return's due date or the date filed) that <br />remain subject to examination by the Company's major tax jurisdictions. Adoption <br />had no effect on the Company's financial statements. <br /> <br />Use of Estimates <br /> <br />The preparation of financial statements, in conformity with accounting principles <br />generally accepted in the United States of America, requires management to make <br />estimates and assumptions that affect the reported amounts of assets and liabilities and <br />disclosure of contingent assets and liabilities as of the balance sheet dates and the <br />reported amounts of revenues and expenses for the years presented. Actual results <br />could differ from those estimates. <br /> <br />Revenue recognition under the percentage-of-completion method is based upon <br />estimates of costs to complete individual contracts. Management's judgment in <br />determining the adequacy of the estimates are based upon several factors, which <br />include, but are not limited to, estimating experience, specific job conditions, and <br />current economic conditions. Given the nature of the construction industry, it is <br />reasonably possible the Company's estimated costs to complete individual contracts <br />could change in the near future. <br /> <br />7 <br />