Page 122 - Annual Report 2016 - Cover & Divider Pages.indd

See Independent Accountant's Review Report.
years ended September 30, 2016 and 2015.
the years ended September 30, 2016 and 2015,

is obtained and as the operating environment changes.
that the estimates used will change within the near term.
represents amounts billed in excess of revenues recognized.

determine its best estimate of the portion that wiil not be collected.
(Continued)
FGM ARCHITECTS INC.
reiiably estimated, revenue is recognized to the extent of costs incurred.
maintains three offices within the state of Illinois and one office in Missouri.
NOTES TO THE FINANCIAL STATEMENTS

NOTE 1 - DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

accounts and the resulting gain or loss is included in income. These assets are reviewed for impairment when events or changes
Property and Equipment. These assets are stated at cost and depreciated over their estimated useful lives, which range from 3
When assets are retired or otherwise disposed of, their cost and related accumulated depreciation are removed from the
in circumstances indicate that the carrying amount of the assets may not be recoverable. There were no impairment charges for
under normal trade terms granted by the Company on the basis of each customers own creditworthiness. The carrying amount
customer's current creditworthiness, estimates the portion Jf any that will not be collected. Additionally/management assesses
to 10 years, using the straight-line method. Generally, maintenance/ repairs and minor renewals are expensed as incurred.
measure of progress on the contracts. Because of inherent uncertainties in estimating costs, it is at least reasonably possible
Contract costs include all direct labor, subcontracts and those indirect costs related to contract performance. General and
collected. Management individually reviews past due accounts receivable balances and based on an assessment of each
excess of amounts billed. The Siability, "Billings in Excess of Costs and Estimated Earnings on Uncompleted Contracts",
of accounts, receivable is reduced by a valuation allowance that reflects management's best estimate of amounts that will not be
realization is probable and the amount can be reliably estimated. When realization is probable, but the amount cannot be
estimates. Significant estimates and assumptions are used for, but not limited to: (1) ailowance for doubtful accounts; (2)
Revenue Recognition. The Company uses the accrual basis of accounting. Revenues from lump-sum design service contracts are
revenue recognition; (3) depreciable lives of assets; and (4) impairment of goodwill. Future events and their effects cannot be
predicted with certainty; accordingly/ accounting estimates require the exercise of judgment. Accounting estimates used in the
result in revisions to costs and income, which are recognized in the period in which the revisions are determined. Changes in
settlements are accounted for as changes in estimates in the current period. Revenue from claims is recognized when
the remaining balance of accounts receivable based on past experience and an assessment of future economic conditions to
Accounts Receivable and Allowance for Doubtfu! Accounts. Accounts receivable are uncollateralized customer obligations due
The asset/ "Costs and Estimated Earnings in Excess of BiEIings on Uncompleted Contracts"/ represents revenues recognized in
estimated job profitability resulting from job performancejob conditions, contract penalty provisions/claims, change orders and
recognized on the percentage-of-compietion method/ measured by the percentage of labor cost incurred to date to estimate
total labor cost for each contract. This method is used because management considers total labor cost to be the best available
administrative costs are charged to expense as incurred. The provision for estimated losses, if any, on uncompieted contracts is
preparation of these financial statements change as new events occur, as more experience is acquired, as additional information
Description of Business. FGM Architects Inc. (the "Company") is engaged in providing architectural services. The Company
generally accepted in the United States of America ("GAAP") requires management to make estimates and assumptions that
made in the period such losses are determined. Changes in job performance, job conditions and estimated profitabiiity may
Reporting Period. The Company has a fiscal year which ends September 30. The accompanying financial statements cover the
affect the amounts reported in the financial statements and accompanying notes. Actuai results could differ from those
Management Estimates and Assumptions. The preparation of financial statements in conformity with accounting principles
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