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I r I' I I: j E:c accountants &: advisors DEVELOPMENT COUNSELLORS INTERNATIONAL, L TO, (AN S CORPORATION) NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2008 AND 2007 Note 1 - Oroanization and Sionificant Accountino Policies (Continued): 1 ' .1 I: Income taxes are accounted for by the asseUliability approach in accordance with FAS- 109 (Accounting for Income Taxes). Deferred taxes represent the expected future tax consequences when the reported amounts of assets and liabilities are recovered or paid. They arise from differences between the financial reporting and tax bases of assets and liabilities and are adjusted for changes in tax laws and tax rates when those changes are enacted. The provision for income taxes represents the total of income taxes paid or payable for the current year, plus the change in deferred taxes during the year. ! I . I I I Property and Equipment: I I , C I: Property and equipment are stated at cost less accumulated depreciation. Depreciation is computed using an accelerated method over the estimated useful lives of the assets. Maintenance and repairs are charged to expense as incurred; major improvements are capitalized. The Company reviews long-lived assets to determine whether there has been any permanent impairment whenever events or circumstances iridicate the carrying amount of an asset may not be recoverable. If the sum of the expected future undiscounted cash flows is less than the carrying amount of the assets, the Company recognizes an impairment 1055. o :1 o , ;j , o I II I~ I I : 'I I! 'I I. Work in Process: These represent fees incurred on behalf of clients that are not yet billed. The amounts are $196,704 and $153,807 as of December 31,2008 and 2007, respectively, Trade Accounts Receivable: Trade accounts receivable is recorded with no allowance for doubtful accounts. Management deems total accounts receivable to be collectible. Balances greater than 90 days past due are reviewed by management. No interest is charged on past due balances and balances greater than 90 days past due are reviewed by management. Allowance for Doubtful Accounts: The Company maintains an allowance for doubtful accounts based upon the expected collections of fee and service receivables. Use of Estimates: The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. - -- .. ... .- ... .... '. '''. .. . . . . . . . .... ..., .. .-.----. - '"' --- ....,. .", '.' . .. ,. -'......,....:-;.