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ValleyCrest Holding Co. and Subsidiaries Notes to Consolidated Financial Statements (continued) 3. Summary of Significant Accounting Policies The following accounting policies represent the significant accounting policies followed in preparing the accompanying consolidated financial statements: Basis of Presentation The consolidated financial statements include the accounts of the Company, its wholly owned subsidiaries, and Glen Annie Golf Club, LLC, a 50% owned consolidated joint venture, over which the Company has operating and voting control. The other member in Glen Annie Golf Club, LLC is a related party. The losses incurred from the operations of Glen Annie Golf Club, LLC have exceeded the minority interest equity capital. Therefore, the loss applicable to the minority interest from the operations of Glen Annie Golf Club, LLC is included in the accompanying consolidated statements of operations as there are no obligations of the minority interest to restore such losses. All significant intercompany transactions and balances have been eliminated in consolidation. Operating Cycle Consolidated balance sheet accounts expected to be paid or received within one year are classified as current. Assets and liabilities relating to long -term contracts are included in current assets and current liabilities in the accompanying consolidated balance sheet, since they will be realized or liquidated in the normal course of contract completion, although completion may require more than one year. Concentration of Credit Risk The Company maintains its cash at one of the nation's largest insured banking institutions. The combined account balances at this institution periodically exceed FDIC insurance coverage, and as a result, there is a concentration of credit risk related to amounts in excess of FDIC insurance coverage. ►b`t t— 0 41ao V011eyCrest landscape *int. 16400 NW 127th Ave. Miami, FL 33018 -1051