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r I NOT FOR PUBLIC INSPECTION / DO NOT COPY This financial statement is private and exempt from public inspection, or copying of public records pursuant to Florida Statutes 119.071 (I)(c). Metric Engineering, Inc. and Subsidiaries Notes to Consolidated Financial Statements June 30, 2009 ~ I r I 1. Summary of Shmificant Accountine Policies (continued) r 1 New Pronouncements - continued r I In May 2008 F ASB Issued Statement Number 162 - The Hierarchy of Generally Accepted Accounting Principles, to identify the sources of accounting principles and the framework for selecting the principles to be used in the preparation of financial statements of nongovernmental entities that are presented in conformity with GAAP in the United States (the GAAP hierarchy). The current GAAP hierarchy, as set forth in the American Institute of Certified Public Accountants (AICP A) Statement on Auditing Standards No. 69, The Meaning of Present Fairly in Conformity With Generally Accepted Accounting Principles, has been criticized because (1) it is directed to the auditor rather than the entity, (2) it is complex, and (3) it ranks FASB Statements of Financial Accounting Concepts, which are subject to the same level of due process as F ASB Statements of Financial Accounting Standards, below industry practices that are widely recognized as generally accepted but that are not subject to due process. The Board believes that the GAAP hierarchy should be directed to entities because it is the entity (not its auditor) that is responsible for selecting accounting principles for financial statements that are presented in conformity with GAAP. Accordingly, the Board concluded that the GAAP hierarchy should reside in the accounting literature established by the F ASB and is issuing this Statement to achieve that result. r I The Company has elected not to early-implement the following Statements issued by F ASB during 2009. Effective dates for implementation of Statement No. 160 - Noncontrolling Interests in Consolidated Financial Statements-an amendment of ARB No. 51 are in 2010: 2. ACQuisition of Advanced Transportation Enl!ineerinl! Consultants. Inc. The Company entered into a stock purchase agreement with the shareholders of Advanced Transpor- tation Engineering Consultants (ATEC) to acquire 55% of the outstanding shares of ATEC (5% from Elio R. Espino and 50% from Javier S Gonzalez) for a purchase price of $235,000; $152,000 payable in cash at the time closing of the transaction and the remaining balance payable in installments of $10,000 per month starting February 28, 2008 for Elio R. Espino and November 28,2008 for Javier S. Gonzalez. [1 At the time of closing the equity of ATEC amounted to approximately $221,212. Consequently, the purchase price was allocated by recording $221,212 as an investment in ATEC, $99,546 as minority interest in subsidiary (representing the 45% owned by Elio R. Espino) and $113,333 as goodwill rec- ognized in the purchase. As a part of the purchase a consulting agreement in the amount of $120,000 was reached with Javier Gonzalez : I ~ J l j ~ J ~ I 8