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I <br /> I <br /> LOGAN WELL USERS,INC. <br /> INOTES TO FINANCIAL STATEMENTS <br /> IAccounts receivable: Accounts receivable are carried at original invoice amount less an estimate for doubtful <br /> receivables. The Organization performs ongoing credit evaluations of its customers within the context of the <br /> I industry in which they operate, and does not require collateral. Management determines the allowance for doubtful <br /> accounts by evaluating individual customer receivables and considering a customer's financial condition, credit <br /> history and current economic conditions. No allowance for doubtful accounts was determined by management to be <br /> necessary at December 31, 2012 or 2011. <br /> IIncome taxes: The Organization has obtained a determination letter from the Internal Revenue Service dated May <br /> 22, 2003 stating that it is classified as an exempt organization under Section 501(c)(12) of the Internal Revenue <br /> I Code. <br /> The Financial Accounting Standards Board issued new guidance on accounting for uncertainty in income taxes. The <br /> I Organization adopted this new guidance for the year ended December 31, 2009. Management evaluated the <br /> Organization's tax positions and concluded that the Organization had taken no uncertain tax positions that require <br /> adjustment to the financial statements to comply with the provisions of this guidance. With few exceptions,the <br /> I Organization is no longer subject to income tax examination by the U.S. federal, state, or local tax authorities for <br /> years before 2009. <br /> Revenue Recognition: The Organization's primary source of revenue is from assessments paid annually by the <br /> Imembers, as calculated by the plan administrator, based on members' estimated water well usage from November <br /> through October(October is generally considered to coincide with the end of the region's growing season). Members <br /> are generally notified of their assessments in February or March and the Organization recognizes assessments <br /> Irevenue at that time. <br /> The Organization reimburses its members for water replenished through recharge and through augmentation wells. <br /> l These reimbursements are based on the same time period(November through October) on which members' <br /> assessments are based. <br /> INote 2. Commitments <br /> The Organization had engaged independent legal counsel and water engineers to assist with drafting, filing and <br /> I amending the augmentation plan discussed in Note 5. Although the plan has been approved,the Organization <br /> expects to incur substantial ongoing future legal and consulting fees with respect to monitoring its compliance with <br /> the water court decree. <br /> I <br /> I <br /> I <br /> I <br /> 6 <br /> I <br />