lanier-audit-2003
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1705 LANIER PLACE, N.W., INC.BALANCE SHEETSAUGUST 31, 2003 AND 20022003 2002ASSETS Cash and Cash Equivalents $ 150,777 $ 119,491 Investments 180,592 180,670 Assessments Receivable 1,450 637 Accounts Receivable - Other 1,613 1,388 Prepaid Insurance 6,907 1,672 Property - Net 62,633 68,585 Total Assets $ 403,972 $ 372,443LIABILITIES AND STOCKHOLDERS' EQUITY Accounts Payable $ 18,740 $ 9,350 Income Taxes Payable 100 50 Prepaid Assessments 1,098 449 Garage Door Opener Deposits 600 500 Total Liabilities $ 20,538 $ 10,349 Operating Reserve $ 17,829 $ 17,829 Replacement Reserves 255,055 230,633 Common Stock 192,000 192,000 Additional Paid in Capital 18,144 18,144 Retained Earnings (Deficit) (99,594) (96,512) Total Stockholders' Equity $ 383,434 $ 362,094 Total Liabilities and Stockholders' Equity $ 403,972 $ 372,443See Accompanying Notes to Financial Statements21705 LANIER PLACE, N.W., INC.STATEMENTS OF INCOMEFOR THE YEARS ENDED AUGUST 31, 2003 AND 20022003 2002INCOME: Assessments $ 126,720 $ 126,720 Parking 5,610 5,610 Interest 6,923 8,753 Laundry 1,639 1,574 Other 3,466 2,247 Total Income $ 144,358 $ 144,904EXPENSES: Management $ 11,700 $ 12,282 Audit and Legal 1,650 4,820 Insurance 8,796 8,798 Other Administrative 4,123 2,841 Utilities 33,074 25,561 Custodial 8,523 8,765 Trash ...
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1705 LANIER PLACE, N.W., INC. BALANCE SHEETS AUGUST 31, 2003 AND 2002
Cash and Cash Equivalents Investments Assessments Receivable Accounts Receivable - Other Prepaid Insurance Property - Net
Total Assets
ASSETS
$
$
2003
150,777 180,592 1,450 1,613 6,907 62,633
403,972
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts Payable Income Taxes Payable Prepaid Assessments Garage Door Opener Deposits Total Liabilities
Operating Reserve Replacement Reserves Common Stock Additional Paid in Capital Retained Earnings (Deficit) Total Stockholders' Equity
Total Liabilities and Stockholders' Equity
See Accompanying Notes to Financial Statements 2
$
$
$
$
$
18,740 100 1,098 600 20,538
17,829 255,055 192,000 18,144 (99,594) 383,434
403,972
$
$
$
$
$
$
$
2002
119,491 180,670 637 1,388 1,672 68,585
372,443
9,350 50 449 500 10,349
17,829 230,633 192,000 18,144 (96,512) 362,094
372,443
INCOME:
1705 LANIER PLACE, N.W., INC. STATEMENTS OF INCOME FOR THE YEARS ENDED AUGUST 31, 2003 AND 2002
Assessments Parking Interest Laundry Other Total Income
EXPENSES:
Management Audit and Legal Insurance Other Administrative Utilities Custodial Trash Removal Snow Removal HVAC Landscaping Repairs and Maintenance Real Estate Taxes Depreciation Income Taxes Total Expenses
Net Income before Contribution to Reserves Contribution to Reserves
Net Income (Loss)
See Accompanying Notes to Financial Statements 3
$
$
$
$
$
$
2003
126,720 5,610 6,923 1,639 3,466 144,358
11,700 1,650 8,796 4,123 33,074 8,523 3,605 3,600 7,423 4,701 10,468 15,828 9,427 100 123,018
21,340 (27,897)
(6,557)
$
$
$
$
$
$
2002
126,720 5,610 8,753 1,574 2,247 144,904
12,282 4,820 8,798 2,841 25,561 8,765 3,437 300 5,931 4,082 6,534 10,602 9,377 100 103,430
41,474 (37,297)
4,177
Balance as of August 31, 2001
Additions: Contribution to Reserve Net Income
Deductions: Landscaping Irrigation System
Balance as of August 31, 2002
Addition: Contribution to Reserves
Deductions: Windows Net Loss
Balance as of August 31, 2003
1705 LANIER PLACE, N.W., INC. STATEMENTS OF STOCKHOLDERS' EQUITY FOR THE YEARS ENDED AUGUST 31, 2003 AND 2002
Operating Reserve
$ 8,429
9,400
$ 17,829
$ 17,829
See Accompanying Notes to Financial Statements
Replacement Reserves
$ 210,155
27,897
(2,180) (5,239)
$ 230,633
27,897
(3,475)
$ 255,055
4
Common Stock
$ 192,000
$ 192,000
$ 192,000
Additional Paid In Capital
$ 18,144
$ 18,144
$ 18,144
Retained Earnings (Deficit)
$ (100,689)
4,177
$ (96,512)
3,475 (6,557) $ (99,594)
Total Stockholders' Equity
$ 328,039
37,297 4,177
(2,180) (5,239)
$ 362,094
27,897
(6,557)
$ 383,434
1705 LANIER PLACE, N.W., INC. STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED AUGUST 31, 2003 AND 2002
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income (Loss)
Adjustments to Reconcile Net Income (Loss) to Net Cash Provided by Operating Activities:
Depreciation
Decrease (Increase) in: Assessments Receivable Accounts Receivable - Other Prepaid Expenses Prepaid Insurance
Increase (Decrease) in: Accounts Payable Income Taxes Payable Prepaid Assessments Garage Door Opener Deposits Net Cash Flows From Operating Activities
CASH FLOWS FROM INVESTING ACTIVITIES:
Received from Assessments (Reserves) Disbursed for Reserve Expenditures Received from Investments Decrease in Investments Net Cash Flows From Investing Activities
Net Increase in Cash and Cash Equivalents
Cash and Cash Equivalents at Beginning of Year
Cash and Cash Equivalents at End of Year
$
$
$
$
$
$
2003
(6,557)
9,427
(813) (225) -(5,235)
9,390 50 649 100 6,786
27,897 (3,475) 20,078 (20,000) 24,500
31,286
119,491
150,777
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash Paid for Income Taxes
See Accompanying Notes to Financial Statements 5
$
50
$
$
$
$
$
$
$
2002
4,177
9,377
(481) 159 816 992
2,337 25 (4,396) 50 13,056
37,297 (9,419) 109,542 (99,921) 37,499
50,555
68,936
119,491
100
1705 LANIER PLACE, N.W., INC. NOTES TO FINANCIAL STATEMENTS AUGUST 31, 2003 AND 2002 NOTE 1 - NATURE OF OPERATIONS: The Cooperative is organized under the laws of the State of Delaware for the purposes of maintaining and preserving the common property of the Cooperative. The Cooperative consists of 30 units within 2 buildings and is located in Northwest Washington, D.C. NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES: A) Method of Accounting - The financial statements are presented on the accrual method of accounting in which revenues are recognized when earned and expenses when incurred, not necessarily when received or paid. B) Member Assessments - Cooperative members are subject to monthly assessments to provide funds for the Cooperative's operating expenses, future capital acquisitions, and major repairs and replacements. Assessments receivable at the balance sheet date represent fees due from unit owners. The Cooperative's policy is to retain legal counsel and place liens on the properties of owners whose assessments are delinquent. Any excess assessments at year end are retained by the Cooperative for use in future years. C) Bad Debt - The Cooperative utilizes the direct write-off method of accounting for bad debt. Individual receivables are written off as a loss when a determination is made that they are uncollectible. Under the direct write-off method, collection efforts may continue, and recovery of amounts previously written off are recognized as income in the year of collection. Assessments receivable may also include late fees and other owner charges. D) Depreciation - Fixed assets are carried at cost and are being depreciated over the estimated useful lives using the straight-line method. E) Cash Equivalents - For purposes of the statement of cash flows, the Cooperative considers all highly liquid investments with an original maturity of three months or less to be cash equivalents. This policy was changed during fiscal year 2003 and, therefore, the prior year statement of cash flow has been restated to reflect this change. There was no effect on total assets or net income as a result of this restatement. F) Reclassification - Certain amounts have been reclassified in the accompanying 2002 financial statements to conform to the 2003 presentation. NOTE 3 - REPLACEMENT RESERVES: The Cooperative's governing documents require that funds be accumulated for future major repairs and replacements. Accumulated funds are generally not available for expenditures for normal operations. 6
1705 LANIER PLACE, N.W., INC. NOTES TO FINANCIAL STATEMENTS AUGUST 31, 2003 AND 2002 (CONTINUED) NOTE 3 - REPLACEMENT RESERVES: (CONTINUED) The Cooperative had a replacement reserve study conducted by an engineer during 1999, which was revised 2000. The Cooperative utilizes the cash flow method of funding for replacement reserves. The table included in the supplementary information of Future Major Repairs and Replacements is based on this study. The Cooperative is funding for future major repairs and replacements over the remaining useful lives of the components based on the study's estimates of the replacement costs and considering amounts previously accumulated in the replacement reserves. Accordingly, the funding recommendation of $27,897 (approximately $77 per unit per month) has been included in the 2003 financial statements. Funds are being accumulated in replacement reserves based on estimates of future needs for repair and replacement of common property components. Actual expenditures may vary from the estimated future expenditures and the variations may be material; therefore, amounts accumulated in the replacement reserves may or may not be adequate to meet all future needs for major repairs and replacements. If additional funds are needed, the Board of Directors, on behalf of the Cooperative, may increase regular assessments, pass special assessments, or delay major repairs and replacements until funds are available. As of August 31, 2003 and 2002, the Cooperative had designated $255,055 and $230,633, respectively, for replacement reserves. NOTE 4 - INCOME TAXES: For fiscal years 2003 and 2002 income tax purposes, the Cooperative files as a nonexempt cooperative under subchapter T (IRC Sections 1381 - 1388). The Cooperative's income is allocated between patronage and non-patronage income. Non-patronage income, such as rental income and other third party income is considered taxable at the normal corporate rates. Income derived from shareholders and interest income is considered patronage income. Under certain circumstance, patronage income may be returned to shareholders through patronage dividends. NOTE 5 - CASH AND INVESTMENTS: As of August 31, 2003, the Cooperative maintained its funds in the following manner: Type Cash and Cash Institution Account Equivalents Investments Total Chevy Chase Checking $ 30,690 $ - $ 30,690 Wachovia Money Markets (2) 120,087 120,087 7
1705 LANIER PLACE, N.W., INC. NOTES TO FINANCIAL STATEMENTS AUGUST 31, 2003 AND 2002 (CONTINUED) NOTE 5 - CASH AND INVESTMENTS: (CONTINUED) Type Cash and Cash Institution Account Equivalents Investments Total U.S. Government Treasury Notes (6) - 180,592 180,592 Total Cash $ 150,777 $ 180,592 $ 331,369 It is the intent of the Cooperative to hold all investments in debt securities to maturity. As of August 31, 2003, the market value of the U.S. Government securities approximated amortized. The Cooperative maintains cash balances at various banks. Cash accounts at banks are insured by the FDIC for up to $100,000. Amounts in excess of insured limits were approximately $20,087 as of August 31, 2003. NOTE 6 - PROPERTY - NET: Property is stated at cost less accumulated depreciation. Expenditures for maintenance and repairs and relatively minor expenditures for betterments that do not extend the life of an asset beyond its original estimated normal life are charged to operations. Major expenditures for betterments which extend the life of an asset are capitalized. Depreciation is computed using the straight-line method over the estimated useful lives of 5 to 15 years. Current year depreciation was $9,377. 2003 2002 Building $ 165,826 $ 165,826 Land 26,174 26,174 Improvement 91,839 88,364 Equipment 26,247 26,247 Less Accumulated Depreciation (247,453) (238,026) Property - Net $ 62,633 $ 68,585 NOTE 7 - GARAGE DOOR OPENER DEPOSITS: The Cooperative collects deposits from unit owners for garage door openers. Once the transmitters are returned to the Cooperative, a portion of this deposit is refunded to the unit owners. As of December 31, 2003 and 2002, the balance of owner deposits was $600 and $500, respectively. NOTE 8 - OPERATING RESERVE: During 1995, the Board of Directors authorized an inter-equity transfer of $9,000 from retained earnings to establish an operating reserve for any unforeseen or 8
1705 LANIER PLACE, N.W., INC. NOTES TO FINANCIAL STATEMENTS AUGUST 31, 2003 AND 2002 (CONTINUED) NOTE 8 - OPERATING RESERVE: (CONTINUED) unbudgeted expenditures. During fiscal year 2002, the Cooperative contributed $9,400 to this fund. The balance in the operating reserve as of August 31, 2003 and 2002 was $17,829. NOTE 9 - COMMON STOCK: The Cooperative has 1,920 authorized and issued shares of common stock outstanding at $100 per share. As of August 31, 2003 and 2002, the Cooperative’s financial statements reflected $192,000 in common stock and $18,144 in additional paid in capital.
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1705 LANIER PLACE, N.W., INC. SUPPLEMENTARY INFORMATION ON FUTURE MAJOR REPAIRS AND REPLACEMENTS AUGUST 31, 2003 (UNAUDITED) The Cooperative had a replacement reserve study conducted by an engineer during 1999, which was revised during 2000 to estimate the remaining useful lives and the replacement costs of the components of common property. The Cooperative utilizes the cash flow method of funding for replacement reserves. Replacement costs were based on the estimated costs to repair or replace the common property components at the date of the study. Estimated replacement costs do not take into account the effects of inflation between the date of the study and the date the components will require repair or replacement. The following has been extracted from the Cooperative's replacement reserve study and presents significant information about the components of common property. 2000 Estimated Remaining 2000 Useful Estimated Life Replacement Component (Years) Cost Site Improvements: Fencing 8-30 $ 7,801 Retaining Walls 19-33 7,254 Concrete Driveways/ Steps/Alley 3-35 23,340 Building Exterior: Doors 3-20 6,985 Roofs 7-20 64,850 Scaffolding 7 60,000
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