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<br />As of December 31, 2009, the Company had no amounts of cash or cash equivalents in financial institutions in excess of amounts insured by <br />agencies of the U.S. Government. <br /> <br />Fixed Assets and Depreciation – Management determined that the Company’s dam and reservoirs must be reconstructed with new <br />construction, and that the canal excavations and structures need to be replaced, and wrote off these assets in a prior year. The Company <br />purchased a tractor in 2008 for $21,700 which was depreciated on a straight line basis with a 7 year life and no salvage. During the year <br />ended 2009, management determined that the tractor had a salvage value of $2,000. Therefore, a $14,017 impairment was taken against the <br />tractor in 2009. <br /> <br />Costs to reconstruct the dam and reservoirs are capitalized in accordance with ASC 835 and 360. Canal excavations and structures will only <br />be capitalized if it improves the asset. <br /> <br />Depreciation is computed on the straight-line method. Below is a summary of property and equipment: <br /> <br /> <br />Long-lived Asset Policy – The Company reviews its long term assets once per year to ascertain if an impairment or write-down is <br />necessary. In the past, HCIC incurred costs to the rehabilitation of the Cucharas Reservoir, mostly from engineering work. Management has <br />determined that prior engineering work through August,2 009 is not useful for the reservoir reconstruction and has written off these <br />expenses. <br /> <br />Loss per Share – Basic net loss per share is computed by dividing the total net loss by the weighted average number of shares <br />outstanding. Diluted loss per share is not shown for periods in which the Company incurs a loss because it would be anti-dilutive. <br /> <br />Use of Estimates – The preparation of financial statements in conformity with generally accepted accounting principles requires management <br />to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and <br />liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual <br />results could differ from those estimates. <br /> <br />Future Commitments – The Company has no long term commitments for the lease or rental of any equipment or facilities. See also Note 2. <br /> <br /> <br /> <br />Asset Type Life in Years <br />December 31, <br />2009 <br />December 31, <br />2008 <br />Equipment 5 – 7 $21,700 21,700 <br />Construction in progress 162,948 - <br />Subtotal 184,648 21,700 <br />Less Accumulated depreciation (5,683) (2,583) <br />Less Impairments (14,017) - <br />Net Book Value $164,948 19,117 <br /> <br />Page 9