BAM Y1 Footnotes

Accounting Method

(part of Footnote 1)

The financial statements are prepared in accordance with the Generally Accepted Accounting Principles (GAAP) of the United States. As such, management is required to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, and expenses and disclosure of contingent assets and liabilities. Actual results may differ from those estimates and assumptions.

Subsequent Events

(part of Footnote 1)

In accordance with ASC 855, the Company has evaluated subsequent events through January 28, 20X2, which is the date the financial statements were issued. The Company has entered into a new ten-year lease and a new three-year lease that will require annual lease payments of $38,000 and $3,765, respectively. The company also plans to finance the purchase of two new trucks in February, 20X2. There are no other subsequent events that would have a material effect on the financial condition of the Company.

Revenue Recognition

(part of Footnote 1)

Service revenue is recorded as services are performed on contract. In accordance with ASC 606-10-05-3, the Company recognizes revenue when goods or services are transferred to customers for the amount the company expects to be entitled to receive in exchange for those goods and services. The Company’s service contracts meet the criteria set forth in ASC 606-10-25-1.

Accounts Receivable

(part of Footnote 1)

Accounts receivable are recorded at their original carrying value less allowances for estimated uncollectible accounts. At December 31, there were no accounts estimated to be uncollectible or impaired.

Supplies on Hand

(part of Footnote 1)

Supplies on hand are stated at cost, which does not exceed market. The Company uses the first-in first-out inventory method to determine costPr

Prepaid Insurance

(Part of Footnote 1)

Prepaid insurance consists of a two-year insurance policy that will expire in 20X3

Licensing Agreement

(Part of Footnote 1)

The licensing agreement is stated at cost less accumulated amortization. The license is being amortized using the straight-line method over the fifteen year life of the agreement.

Property, Plant, and Equipment

(Part of Footnote 1)

Property, plant, and equipment are stated at cost and depreciation is computed using the straight-line method at rates based upon the estimated useful lives of the assets.

The major class of assets owned by the Company follows:

Equipment 7 years

Expenditures for repairs and maintenance are charged to expense as incurred. Expenditures for major renewals and betterments, which significantly extend the useful lives of existing plant and equipment, are capitalized and depreciated.

Income Taxes

(Part of Footnote 1)

Income tax expense (benefit) includes income taxes currently payable (receivable). There are no temporary tax differences between the financial statement and tax bases of assets and liabilities, and therefore, no deferred taxes are reported in 20X1

Earnings per Share

(Part of Footnote 1)

Earnings per share is calculated by dividing net income (loss) available to common stockholders by the weighted average shares outstanding during the year. Weighted average common shares outstanding totaled 14,567 shares in 20X1.

Summary of Significant Accounting Policies

Footnote 1

Lease Cost

Footnote 2

An analysis of the year’s lease expense by property leased in accordance with ASC 842-20-50-4 follows:

Short-Term Lease Cost 20X1

Shop and Office Building 29,400

Trucks 72,300

Total lease expense 101,700

Income Taxes

Footnote 3

The net operating loss tax benefit represents future tax benefits that the Company expects to realize from the carryforward of $17,117 of current period taxable losses to future periods in which taxable income exists. The carryforward tax benefit is expected to reduce taxes payable by up to $3,594.

Management believes that it is more likely than not that the entire amount of the carryforward will not be utilized and has established a valuation allowance of $1,258 representing the tax savings which may not be realized.

No income tax payments were made in 20X1. The effective tax rate is equal to the statutory tax rate of 21%.

Information about Major Customers

Footnote 4

The Company's source of revenue was composed of seven maintenance contracts. Six of these seven individual contracts qualify as major customers in accordance with ASC 280-10-50-42. These six customers individually provided a range of 11.81 to 18.36 percent of total revenues earned during the current year

Reconciliation of Net Income (Loss) to Net Cash Flows from Operating Activities

Footnote 5

The schedule showing the reconciliation of net income for 20X1 to the net cash flows from operating activities in accordance with ASC 230-10-45-30 is presented below:

Net Loss (14,781)

Adjustments to reconcile earnings to cash flow:

Depreciation and amortization 9,357

Increase in net accounts receivable (82,500)

Increase in supplies inventory (3,840)

Increase in prepaid insurance (2,654)

Increase in tax benefit net of valuation allowance (2,336)

Increase in accounts payable 20,060

Increase in wages payable 15,969

Net cash used by operations (60,725)

Included in Footnote 1

Accounting Method, Subsequent Events, Revenue Recognition, Accounts Receivable, Supplies on Hand, Prepaid Insurance, Licensing Agreement, Property Plant & Equipment, Income Taxes, Earnings per Share