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<br />Notes to Divisional Balance Sheet, Continued <br />2. Accounting Policies, continued: <br />d. Estimates and Assumptions: The preparation of a balance sli~•et in conformity with <br />generally accepted accounting principles requires management to make estimates and <br />assumptions that affect the reponed amounts of assets and liabilities and disclosure of <br />contingent assets and liabilities at the date of the balance sheet. Actual results could differ <br />from those estimates. <br />e. ]ncome Taaes: Effective January I, 1989, the stockholders of the Parent company elected <br />to have the Parent company cased as an S-Corporation under the applicable provisions of the <br />Internal Revenue Code. The result of this election is that the Di+•ision's taxable income o- <br />loss is included in the amounts reponed by the Parent compan~• to stockholders for inclusion. <br />in their personal tax returns. <br />3. Land Contract: <br />Lone-term deb: at Decembe.- . 1. 199 i consists of rile f~lin~+ ~^_ <br />Land contract, bea-~na interest at ?.00 pe-cen;, payable in sem,a^n,;a ins:a'~~e^:: <br />o! X81,1365, payments applied first to interest then to the ur.pa~c pnnc:.'+a:, v, t- <br />the imal payment due t.`arch "~, 202". g r,g?.:,46. <br />Less current por.~or <br />33.00; <br />~ 1.8=1 4F•- <br />The Di•.tsion has e+aluated the fair value of its debt base' or. the cornea: in!erest rat, <br />en+'ironment and cornea: pacing of debt intstruments +vith compa.-ahie terms. Tice earning <br />value of this debt is considered to approximate fair value. <br />4. Related Party Transactions: <br />Amounts payable to Ed++. C. Lery Co. and affiliates, net are the result of transactions arising <br />out of the normal conduct of business. <br />4 <br />