Opening of Bids - Grand Trunk Railroad Water Main Replacement Greenlawn & 30th St Proj No 122-041 - Selge Construction CO., Inc

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Selge Construction Company, Inc. Notes to Financial Statements Note 1. Nature of Business and Significant Accounting Policies Nature of business: Selge Construction Company, Inc. (the Company) is a commercial contractor specializing in the construction of underground sewer and water mains. The Company's contracts are typically with businesses and municipalities in northern Indiana and southern Michigan. Significant accounting policies: Use of estimates: The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Accordingly, actual results could differ from those estimates. Variable interest entity: The Company has elected an accounting alternative as provided for in Accounting Standards Update (ASU) No. 2018-17, Consolidation (Topic 810): Targeted Improvements to Related Party Guidance for Variable Interest Entities, issued by the Financial Accounting Standards Board (FASB). Pursuant to this election, the Company did not apply the variable interest entity (VIE) guidance in Accounting Standards Codification (ASC) 810 to assess certain entities under common control for consolidation for the years ended February 28, 2025 and February 29, 2024. See Note 11 for additional information. Cash: The Company has cash on deposit in financial institutions which, at times, may be in excess of Federal Deposit Insurance Corporation limits. Certificates of deposit: The certificates of deposit consist of accumulated cash from operations and range in maturity date from 90 days to one year. The Company accounts for the certificates of deposit at cost. Contract receivables: Contract receivables are carried at original invoice amount less an estimate made for credit losses based on a review of all outstanding amounts on a monthly basis. Contract receivables in the accompanying balance sheets at February 28, 2025 and February 29, 2024, are stated net of an allowance for credit losses of $15,000. Management determines the allowance for credit losses by identifying troubled accounts and by using historical experience applied to an aging of accounts. Contract receivables are written off when deemed uncollectible. Recoveries of contract receivables previously written off are recorded when received. A contract receivable is considered past due if any portion of the receivable balance is outstanding for more than 30 days. The Company generally does not charge interest on past due receivables. Contract receivables represent amounts billed to customers under customary industry credit terms. In accordance with construction industry practice, retainage is a portion of the final payment of a contract that is withheld until the project is complete in accordance with the terms of the contract. The Company records retainage receivables on long-term contracts as a component of receivables. Retainage amounts outstanding at February 28, 2025 and February 29, 2024, are approximately $1,091,500 and $2,525,800, respectively. Property and equipment: Improvements and betterments are capitalized; routine maintenance and repairs are charged to expense as incurred. When equipment is retired or otherwise disposed of, the cost and related accumulated depreciation are removed from the respective accounts and any gains or losses arising from the disposition are reflected in construction expenses.