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<br />,r-o.. <br />w <br /> <br />COASTAL CONTRACTING AND DEVELOPMENT, INC. <br />NOTES TO FINANCIAL STATEMENTS <br />DECEMBER 31, 2010 <br /> <br />9 <br /> <br />NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) <br /> <br />Prooertv and EQuioment <br /> <br />Property and equipment are recorded at cost. Depreciation is provided principally on the straight-line <br />method over the estimated useful lives of the respective assets. Maintenance and repairs are <br />charged to expense as incurred; major renewals and betterments are capitalized. When items of <br />property and equipment are sold or retired, the related cost and accumulated depreciation are <br />removed from the accounts and any gain or loss is included in the results of operations. <br /> <br />Income Taxes <br /> <br />c <br /> <br />The Company files income tax returns using the cash method. Current income taxes are based on <br />the year's income taxable for federal and state tax reporting purposes. Deferred income tax assets <br />and liabilities are computed annually for differences between the financial statement and tax bases of <br />assets and liabilities that will result in taxable or deductible amounts in the future based on enacted <br />tax laws and rates applicable to the periods in which the differences are expected to affect taxable <br />income. Valuation allowances are established when necessary to reduce deferred tax assets and <br />liabilities to the amount expected to be realized. Accelerated depreciation is used for tax reporting, <br />and straight-line depreciation is used for financial statement reporting. <br /> <br />Use of Estimates <br /> <br />The preparation of financial statements in conformity with generally accepted accounting principles <br />requires management to make estimates and assumptions that affect the reported amounts of assets <br />and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements <br />and the reported amounts of revenues and expenses during the reporting period. Actual results could <br />differ from lhose estimates. <br /> <br />NOTE B - CONTRACT RECEIVABLES <br /> <br />Contract receivables, at December 31, 2010, consist of the following: <br /> <br />Contracts in process <br />Contracts completed <br />Retention on contracts in process <br />Retention on contracts completed <br /> <br />$ <br /> <br />74,721 <br />o <br />137,692 <br />o <br /> <br />$ 212,413 <br /> <br />c <br />