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r----.- - --- - - . . :. e . . . . . . . . . NOTE 1. . I. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I. '. . . BERMELLO, AJA1\1IL & P ARTN~RS, INC. NOTES TO FJNANCw..., 31' A TElvIENTS DECEMBER 31, 2005 M'"D 2004 SUlrflvfARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Cash For purpose of the statements of cash flows, the Company cOnsiders all highly liquid instruments purchased with a maturity of three months or less to be cash equivalents. The Company places its cash with quality financial instituti01'l~, Such balances may temporarily exceed at a given day the insured limits of the Federal Deposit Insurance Corporation due to the volume of daily cash activity. The Company has not experienced any losses in such accounts, Property and Equipment Property and equipment are carried at cost, less accumulated depreciation and amortization, Depreciation is provided principally on the straight-line method over the estimated useful lives of the assets. Amortization is provided on the straight-line method over the lesser of the term of the lease or the life of the asset Depreciation and amortization is included in general and administrative expenses. When property is retired or otherwise disposed of, the related cost and accumulated depreciation are removed from the accounts and any resulting gains or losses are credited or charged to operations, Estimated usefullives of property and equipment are as follows: Asset Life Leasehold improvements Furniture and equipment Computer and transpOliation equipment 4 - 8 years 5 - 7 years 3 - 5 years Income Taxes The Company, with the consent of its stockholders, has elected Subchapter "S" corporate status, In lieu of corporate income taxes, the individual stockholders of the Company are taxed on their proportionate share of the Company's taxable income, Therefore, no provision for income taxes has been included in the financial statements. The, Compa.T1Y uses the cash basis method for i,Dcome tax reporting purposes, Use of Estimates The preparation of financial statements in conformity with U.S, generally accepted accounting principles requires management to make estimates and assumptions. that affect the reported amounts of assets and liabilities, the disclosure of contingent ?lssets and liabilities, and the reported amounts of revenues and ex.penses, Actual results cmlld diffcr from those estimates, -8-