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, 2018 and 2017, the Company had approximately $6,900,000 and
$9,000,000 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 net realizable value, cost being determined using the
average cost method which approximates the first-in, first-out (FIFO) method.
Deferred Land Costs
Included in deferred land costs is the Company’s original basis in its undeveloped landholdings
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, 2018 and
2017.
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