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LEFT HAND DITCH COMPANY <br />NOTES TO FINANCIAL STATEMENTS <br />December 31, 2011 and 2010 <br />NOTE 1- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES <br />Nature of Business. Left Hand Ditch Company (the Company) has been in existence <br />since the 1800s and was granted tax exempt status in February, 1945. The Company owns <br />and operates irrigation water systems in Boulder County, Colorado. The Company grants <br />credit to all of its Boulder County customers for annual assessments. <br />Revenue Recognition. The Company sets member assessments at its annual meeting as <br />recommended by the Board of Directors. Assessments are billed annually for the January - <br />December calendar year. <br />Cash and Cash Equivalents. The Company presents its cash flow statements using the <br />indirect method. For purposes of cash flow presentation, the Company considers cash on <br />hand, demand deposits with financial institutions, and all highly liquid debt instruments with <br />a maturity of three months or less to be cash equivalents. <br />Property and Equipment. Property and equipment are stated at cost except for <br />adjudicated water rights, which are carried at a nominal value of $1. Substantially all <br />depreciation expense has been determined using the straight -line method. Generally, <br />acquisitions of property and equipment in excess of $500 are capitalized. The cost of <br />maintenance and repairs is charged against income as incurred; significant renewals, <br />betterments and improvements are capitalized. <br />Allowance for Doubtful Accounts. No allowance for doubtful accounts has been <br />provided for in the Company's financial statements pursuant to the Company's policy of <br />selling individual shares when assessments and related interest become more than two years <br />in arrears. <br />Use of Estimates. The preparation of financial statements in conformity with generally <br />accepted accounting principles requires management to make estimates and assumptions that <br />affect certain reported amounts and disclosures. Accordingly, actual results could differ from <br />those estimates. <br />NOTE 2 - CONCENTRATION OF CREDIT RISK <br />The Company maintains its checking and savings accounts with financial institutions that <br />insure cash balances of up to $250,000 through the Federal Deposit Insurance Corporation. <br />At December 31, 2011, the Company had $69,210 in uninsured cash balances. <br />Page 5 <br />