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Selge Construction Company, Inc. <br />Notes to Financial Statements <br />Note 6. Pledged Assets, Notes Payable, Long -Term Debt and Subsequent Event (Continued) <br />The Company has elected to apply the guidance under ASC 470, Debt. Under the provisions of ASC 470, <br />the amounts received under the loan are recognized as debt, until it is either paid off or the debtor is <br />legally released as the primary obligor. Under the PPP program, the debtor is released at the point the <br />application for forgiveness is approved. The gain from the release of the liability, including accrued <br />interest, will be presented in the statements of income as a gain on the forgiveness of debt. <br />Under the program, the Company submitted the PPP loan forgiveness application and received approval <br />from the SBA during the year ended February 28, 2022. The entire balance of the forgiven loan was <br />recognized into income and included in other nonoperating income on the accompanying statement of <br />income for the year ending February 28, 2022. <br />Aggregate maturities of long-term debt, for the years ending February 2024 through 2027 are as follows: <br />2024 <br />$ 139,000 <br />2025 <br />28,500 <br />2026 <br />26,000 <br />2027 <br />8,567 <br />$ 202,067 <br />Subsequent to February 28, 2022, the Company financed the purchase of equipment that was previously <br />leased under operating leases. The total amount financed with a note payable was $486,615. The note is <br />due in monthly installments of $14,488 including interest at 4.56%. The maturity date is March 2025. <br />Note 7. Accrued Expenses <br />Accrued expenses are composed of the following at February 28, 2022 and 2021: <br />Profit sharing <br />Accrued payroll, payroll taxes and other withholdings <br />Other expenses <br />Note 8. Operating Lease Commitments <br />2022 2021 <br />$ 14,555 $ 134,818 <br />99,824 108,626 <br />8,395 19,638 <br />$ 122,774 $ 263,082 <br />The Company leases equipment from unrelated parties under operating lease agreements which expire <br />in March 2022. The lease agreements require monthly payments of approximately $11,000. Rent <br />expense under these agreements for the years ended February 28, 2022 and 2021, was approximately <br />$131,100 and $112,900, respectively. Upon the final monthly payment in March 2022, the lease was not <br />renewed. <br />13 <br />