subsidiaries also record to plant and CIAC the fair market value of developer installed mains
and any excess of fair market value over the cost of community water systems purchased
from developers. CIAC are amortized over the life of the related properties.
Revenues
Standard charges for water utility services to customers are recorded as revenue, based upon
meter readings and contract service, as services are provided. The majority of our Company’s
water revenues are based on rates approved by the NHPUC. Estimates of unbilled service
revenues are recorded in the period the services are provided. Provision is made in the
consolidated financial statements for estimated uncollectible accounts.
Non-regulated water management services include contract operations and maintenance, and
water testing and billing services to municipalities and small, privately owned community
water systems. Contract revenues are billed and recognized on a monthly recurring basis in
accordance with agreed-upon contract rates. Revenues from unplanned additional work are
based upon time and materials incurred in connection with activities not specifically identi-
fied in the contract, or for which work levels exceed contracted amounts.
Revenues from real estate operations, other than undistributed earnings or losses from equity
method joint ventures, are recorded upon completion of a sale of real property. Our
Company’s real estate holdings outside of our regulated utilities are comprised primarily of
undeveloped land.
Investment in Joint Venture
Southwood uses the equity method of accounting for its investment in a joint venture in
which it does not have a controlling interest. Under this method, Southwood records its
proportionate share of losses under “Other, net” in the accompanying Consolidated State-
ments of Income with a corresponding decrease in the carrying value of the investment.
Income Taxes
Income taxes are recorded using the accrual method and the provision for federal and state
income taxes is based on income reported in the consolidated financial statements, adjusted
for items not recognized for income tax purposes. Provisions for deferred income taxes
are recognized for accelerated depreciation and other temporary differences. A valuation
allowance is provided to offset any net deferred tax assets if, based upon available evidence,
it is more likely than not that some or all of the deferred tax assets will not be realized.
Investment tax credits previously realized for income tax purposes are amortized for financial
statement purposes over the life of the property, giving rise to the credit.
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