Concentration of Credit Risks
Financial instruments that subject the Company to credit risk consist primarily of cash
(including cash equivalents and restricted cash) and accounts receivable. Cash balances are
invested in financial institutions insured by the Federal Deposit Insurance Corporation
(“FDIC”). At December 31, 2017 and 2016, the Company had approximately $9,000,000
and $16,950,000 in excess of FDIC insured limits, respectively. Our accounts receivable
balances primarily represent amounts due from the residential, commercial and industrial
customers of our regulated water utility operations, as well as receivables from our Service
Corporation customers.
Accounts Receivable — Billed, Net
Accounts receivable are recorded at the invoiced amounts. The allowance for doubtful
accounts is our best estimate of the amount of probable credit losses in our existing accounts
receivable, and is determined based on historical write-off experience and the aging of
account balances. We review the allowance for doubtful accounts quarterly. Account
balances are written off against the allowance when it is probable the receivable will not be
recovered.
Accounts Receivable — Unbilled, Net
We read our customer meters on a monthly basis and record revenues based on meter reading
results. Information from the last meter reading date is used to estimate the value of unbilled
revenues through the end of the accounting period. Estimates of water utility revenues for
water delivered to customers but not yet billed are accrued at the end of each accounting
period. Actual results could differ from those estimates.
Inventory
Inventory is stated at the lower of cost or market, cost being determined using the average
cost method which approximates the first-in, first-out (FIF O) method through December 31,
2016. Effective January 1, 2017, inventory is stated at the lower of cost or net realizable
value, cost being determined using the average cost method which approximates the FIFO
method.
Deferred Land Costs
Included in deferred land costs is the Company’s original basis in its undeveloped land-
holdings and any land improvement costs, which are stated at the lower of cost or market.
All costs associated with real estate and land projects are capitalized and allocated to the
project to which the costs relate. Administrative labor and the related fringe benefit costs
attributable to the acquisition, active development, and construction of land parcels are
capitalized as deferred land costs. No labor and benefits were capitalized for the years ended
December 31, 2017 and 2016.
13
