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Schmidt Construction <br />Notes to Divisjonal Balance Sheet <br />December 31, 2007 <br />Note 1 -Nature of Business and Significant Accounting Policies <br />(Continued) <br />Revenue Recognition -Revenue from sales of asphalt products is recognized when the <br />product is shipped to the customer. Revenue on long-term contracts is recognized <br />under the percentage-of-completion method of accounting and is measured principally <br />on aunit-of-delivery basis. Revisions in cost and profit estimates during the course of the <br />contract are reflected in the accounting period in which the facts requiring the revision <br />become known. At the time a loss on a contract becomes known, the entire amount of <br />the estimated ultimate loss is accrued. Due to uncertainties inherent in the estimating <br />process, it is reasonably possible that estimates will change in the near term. <br />Use of Estimates -The preparation of a balance sheet in conformity with accounting <br />principles generally accepted in the United States of America requires management to <br />make estimates and assumptions that affect the reported amounts of assets and liabilities <br />and disclosure of contingent assets and liabilities at the date of the balance sheet. Actual <br />results could differ from those estimates. <br />Note 2 -Property, Plant, and Equipment <br />Major classes of property, plant, and equipment are as follows: <br />Land <br />Land improvements <br />Buildings <br />Machinery and equipment <br />Transportation equipment <br />Total cost <br />Accumulated depreciation <br />Net property, plant, and equipment <br />Note 3 -Related Party Transactions <br />Depreciable <br />Amount Life -Years <br />$ 4,599,662 - <br />682,227 10- 15 <br />9,570,476 7-40 <br />I ,258,161 5- I 0 <br />12,690,290 5 <br />28,800,8 16 <br />(20,042,382) <br />$ 8,758,434 <br />The Division makes and receives noninterest-bearing advances to/from companies <br />affiliated through common ownership. Generally, amounts due from Edw. C. Levy and <br />its affiliates are the result of transactions in the normal course of business, as well as <br />financing the working capital needs of affiliates. Classification between current and long <br />term is based on expected repayment. <br />4 <br />