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TGSV ENTERPRISES, INC. NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2017 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Organization and nature of operations TGSV Enterprises, Inc. (“the Company”) was incorporated on March 22, 1996 under the laws of the State of Florida. The Company is engaged primarily in the construction of commercial buildings in South Florida. The Company’s work is primarily performed under fixed-price and cost-plus fee contracts. The lengths of the Company’s contracts vary, typically ranging from six to eighteen months. The Company follows the practice of filing statutory liens on all construction projects when collection problems are anticipated. The liens serve as collateral for contracts receivable. Revenue and cost recognition Revenues from fixed-price construction contracts are recognized on the percentage-of- completion method, whereby revenues on long-term contracts are recorded on the basis of the Company’s estimates of the percentage of completion of contracts based on the ratio of actual cost incurred to total estimated costs. This cost to cost method is used because management considers it to be the best available measure of progress on these contracts. Revenues from cost-plus fee contracts are recognized on the basis of costs incurred during the period plus the fee earned, measured on the cost to cost method. Revenue from time and material contracts are recognized currently as the work is performed. Cost of revenues include all direct material, subcontractor, labor, and certain other costs related to contract performance, such as indirect labor and fringe benefits, supplies, tools, equipment rental, repairs, insurance and depreciation costs. General and administrative costs are charged to expense as incurred. Provisions for estimated losses on uncompleted contracts are made in the period in which such losses are determined. Changes in job performance, job conditions and estimated profitability may result in revisions to costs and income, and are recognized in the period in which the revisions are determined. Changes in estimated job profitability resulting from job performance, job conditions, contract penalty provisions, claims, change orders, and settlements, are accounted for as changes in estimates in the current period. Claims for additional contract revenue are recognized when realization of the claim is probable and the amount can be reasonably determined. See independent accountants’ review report. -5-