SANDYPORT HOMEOWNERS ASSOCIATION LIMITED

NOTES TO THE AUDITED FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED DECEMBER 31, 2022

(Expressed in Bahamian Dollars)

5. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

c. Cash and cash equivalents - Cash and cash equivalents include cash on hand and at bank and short-term deposits which have a maturity period of less than three months.

d. Trade and other receivables - Accounts receivable is stated at cost less provision for doubtful accounts and any impairment losses. Management records provisions when in their opinion, amounts are irrecoverable based on historical performance and solvency of the customer. The provision for doubtful accounts policy is based on accounts that are 360 days old and remains unpaid.

e. Fixed assets and right-of-use asset - Fixed assets and right-of-use asset are stated at cost less accumulated depreciation and any impairment losses. Historical cost includes expenditures that is directly attributable to the acquisition of the items. Right-of-use asset is stated at present value of lease payments and is presented with fixed assets in the statement of financial position. Depreciation is calculated on the straight-line basis to write-off assets over their estimated useful lives as follows:

Waste water system - 3 - 5 years

Maintenance equipment - 3 years

Computer and office equipment - 3 years

Security equipment - 3 years

Right-of-use asset - 10 years f. Income and expense recognition - Income and expenses are recorded on an accrual basis of accounting g. Improvements - These are various projects that are undertaken for the improvement of common areas. These projects are additions and modifications to existing infrastructure within the community. The costs associated with these projects are expensed in the period incurred but is accounted for on the accrual basis for projects not completed within the fiscal year. Improvements are itemized separately and by project for clarity. h. Related party transactions - Related parties include members of the Board who are also homeowners.