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® nzwETT-KIER CONSTRUCTION, INC. <br /> NOTES TO FINANCIAL STATEMENTS <br /> FOR THE YEAR ENDED DECEMBER 31, 1997 <br /> NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) <br /> Marketable Securities <br /> The Company' s marketable securities consist of debt and equity securities <br /> that have a readily determinable fair market value. Management determines <br /> the appropriate classification of its investments at the time of purchase <br /> and re-evaluates such determinations at each balance sheet date. <br /> Since the Company does not intend to sell these securities in the near <br /> term, they are classified as "available for sale" and, accordingly, are <br /> carried at fair value, with unrealized gains and losses reported as a <br /> separate component within the stockholder's equity section of the balance <br /> sheet. Realized gains and losses on marketable securities are determined <br /> by specific identification or average cost methods and are charged or <br /> credited to current earnings. <br /> Accounting Estimates <br /> The preparation of financial statements in conformity with generally <br /> accepted accounting principles requires management to make estimates and <br /> assumptions that affect the reported amounts of assets and liabilities and <br /> ® the disclosure of contingent assets and liabilities at the date of the <br /> financial statements and the reported amounts of revenues and expenses <br /> during the reporting periods. - Actual results could differ from those <br /> estimates. <br /> Long-Lived Assets <br /> Statement of Financial Accounting Standards ("SFAS") No. 121, "Accounting <br /> for the Impairment of Long-Lived Assets to be Disposed Of" was adopted by <br /> the Company during 1996. This statement requires that long-lived and <br /> certain intangible assets held and used by the Company be reviewed for <br /> impairment. The Company determined that no impairment loss need be <br /> recognized. <br /> NOTE 2. MARKETABLE SECURITIES <br /> At December 31, 1997 the cost and fair value of investments in debt and <br /> equity securities are as follows: <br /> Gross Gross <br /> Unrealized Unrealized <br /> Cost Gains Losses Fair Value <br /> Equity securities $ 222,092 $108,439 $ 330,531 <br /> Mutual funds 1,073,901 <br /> Corporate bond funds 1,004,330 69,571 <br /> Government securities 85,720 <br /> funds 90, 133 $ 4,413 <br /> Municipal bond 694,666 <br /> funds 672,044 22, 622 278, 459 <br /> Municipal bonds 261, 781 16, 678 <br /> $2,250,380 $217, 310 $ 4, 413 $2 463 277 <br /> • <br /> - 6 - <br />