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deposits ‒ The Company records customer deposits when payments are received in advance of the delivery of the merchandise. The |
Company expects that substantially all of the customer deposits will be recognized within six months as the performance obligations |
are satisfied. Construction |
Segment The |
Company’s construction segment revenues are derived primarily through contracts with customers whereby the Company specializes |
in all aspects of products and services relating to finished carpentry, custom cabinetry, and countertops. The Company recognizes revenue |
when control of the promised goods or services is transferred to customers, in an amount that reflects the consideration the Company |
expects to be entitled to in exchange for those goods or services. The Company accounts for a contract when it has approval and commitment |
from both parties, the rights of the parties are identified, payment terms are identified, the contract has commercial substance, and |
collectability of consideration is probable. F- 10 1847 |
HOLDINGS LLC NOTES |
TO THE CONSOLIDATED FINANCIAL STATEMENTS DECEMBER |
31, 2022 AND 2021 A |
contract’s transaction price is allocated to each distinct performance obligation and recognized as revenue when, or as, the performance |
obligation is satisfied. Since most contracts are bundled to include both material and installation services, the Company combines these |
items into one performance obligation as the overall promise to transfer the individual goods or services is not separately identifiable |
from other promises in the contract and, therefore, is not distinct. The Company does offer assurance-type warranties on certain of its |
installed products and services that do not represent a separate performance obligation and, as such, do not impact the timing or extent |
of revenue recognition. For |
any contracts that are not complete at the reporting date, the Company recognizes revenue over time, because of the continuous transfer |
of control to the customer as work is performed at the customer’s site and, therefore, the customer controls the asset as it is |
being installed. The Company utilizes the output method to measure progress toward completion for the value of the goods and services |
transferred to the customer as it believes this best depicts the transfer of control of assets to the customer. Additionally, external |
factors such as weather, and customer delays may affect the progress of a project’s completion, and thus the timing and amount |
of revenue recognition, cash flow, and profitability from a particular contract may be adversely affected. An |
insignificant portion of sales, primarily retail sales, is accounted for on a point-in-time basis when the sale occurs. Sales taxes, |
when incurred, are recorded as a liability and excluded from revenue on a net basis. Contracts |
can be subject to modification to account for changes in contract specifications and requirements. The Company considers contract modifications |
to exist when the modification either creates new, or changes the existing, enforceable rights and obligations. Most contract modifications |
are for goods or services that are not distinct from the existing contract due to the significant integration service provided in the |
context of the contract and are accounted for as if they were part of that existing contract. The effect of a contract modification on |
the transaction price and the Company’s measure of progress for the performance obligation to which it relates, is recognized as |
an adjustment to revenue on a cumulative catch-up basis. All |
contracts are billed either contractually or as work is performed. Billing on long-term contracts occurs primarily on a monthly basis |
throughout the contract period whereby the Company submits progress invoices for customer payment as work is performed. On some contracts, |
the customer may withhold payment on an invoice equal to a percentage of the invoice amount, which will be subsequently paid after satisfactory |
completion of each project. This amount is referred to as retainage and is common practice in the construction industry, as it allows |
for customers to ensure the quality of the service performed prior to full payment. The retention provisions are not considered a significant |
financing component. Cost |
of revenues earned include all direct material and labor costs and those indirect costs related to contract performance. Contract |
Assets and Contract Liabilities The |
Company records a contract asset when it has satisfied its performance obligation prior to billing and a contract liability when a customer |
payment is received prior to the satisfaction of the Company’s performance obligation. The difference between the beginning and |
ending balances of contract assets and liabilities primarily results from the timing of the Company’s performance and the customer’s |
payment. At times, the Company has a right to payment from previous performance that is conditional on something other than passage of |
time, such as retainage, which is included in contract assets or contract liabilities, as determined on a contract-by-contract basis. Automotive |
Supplies Segment The |
Company’s automotive supplies segment designs and sells horn and safety products (electric, air, truck, marine, motorcycle and |
industrial equipment), and offers vehicle emergency and safety warning lights for cars, trucks, industrial equipment and emergency vehicles. |
Focused on the automotive and industrial after-market, the Company sells its products to big-box national retail chains, through specialty |
and industrial distributors, as well as online/mail order retailers and original equipment manufacturers. The Company collects payment for internet and |
phone orders, including tax, from the customer at the time the order is shipped. Customers placing orders with a purchase order through |
the EDI (Electronic Data Interface) are allowed to purchase on credit and make payment after receipt of product on the agreed upon terms. F- 11 1847 |
HOLDINGS LLC NOTES |
TO THE CONSOLIDATED FINANCIAL STATEMENTS DECEMBER |
31, 2022 AND 2021 Performance |
Obligations – The revenue that the Company recognizes arises from orders it receives from contracts with customers. The Company’s |
performance obligations under the customer orders correspond to each sale of merchandise that it makes to customers and each order generally |
contains only one performance obligation based on the merchandise sale to be completed. Control of the delivery transfers to customers |
when the customer can direct the use of, and obtain substantially all the benefits from, the Company’s products, which generally |
occurs when the customer assumes the risk of loss. The transfer of control generally occurs at the point of shipment of the order. Once |
this occurs, the Company has satisfied its performance obligation and it recognizes revenue. Transaction |
Price ‒ The Company agrees with customers on the selling price of each transaction. This transaction price is generally based on |
the agreed upon sales price. In the Company’s contracts with customers, it allocates the entire transaction price to the sales |
price, which is the basis for the determination of the relative standalone selling price allocated to each performance obligation. Any |
sales tax that the Company collects concurrently with revenue-producing activities are excluded from revenue. Cost |
of revenues includes the cost of purchased merchandise plus freight, warehouse salaries, tariffs, and any applicable delivery charges from |
the vendor to the Company. The Company had two major customers who represent a significant portion of revenue in the automotive segment. |
These two customers represented 39.4 % of total revenue in the automotive segment for the year ended December 31, 2022. Warranties |
vary and are typically 90 days to consumers and manufacturing defect warranty to are available to resellers. At times, depending on the |
product, the Company can also offer a warranty up to 12 months. Receivables Receivables |
consist of trade accounts receivable from customer, credit card transactions in the process of settlement, and vendor rebates receivable. |
Vendor rebates receivable represent amounts due from manufactures from whom the Company purchases products. Rebates receivables are stated |
at the amount that management expects to collect from manufacturers, net of accounts payable amounts due the vendor. Rebates are calculated |
on product and model sales programs from specific vendors. The rebates are paid at intermittent periods either in cash or through issuance |
of vendor credit memos, which can be applied against vendor accounts payable. Based on the Company’s assessment of the credit history |
with its manufacturers, it has concluded that there should be no allowance for uncollectible accounts. The Company historically collects |
substantially all of its outstanding rebates receivable. Retainage receivables represent the amount retained by customers to ensure |
the quality of the installation and is received after satisfactory completion of each installation project. Management regularly reviews |
aging of retainage receivables and changes in payment trends and records an allowance when collection of amounts due are considered |
at risk. The allowance for doubtful accounts amounted to $ 359,000 for the years ended December 31, 2022 and 2021, respectively. Uncollectible |
balances are expensed in the periods they are determined to be uncollectible. Inventory For |
Asien’s, inventory mainly consists of appliances that are acquired for resale and is valued at the average cost determined on a |
specific item basis. Inventory also consists of parts that are used in service and repairs and may or may not be charged to the customer |
depending on warranty and contractual relationship. Kyle’s typically orders inventory on a job-by-job basis and those jobs are |
put into production within hours of being received. Inventories consisting of materials and supplies are stated at lower of costs or |
market. High Mountain and Innovative Cabinets’ inventory mainly consists of doors, door frames, baseboards, crown molding, cabinetry, |
countertops, custom cabinets, closet shelving, and other related products. The Company values inventory at each balance sheet date to |
ensure that it is carried at the lower of cost or net realizable value with cost determined based on the average cost basis. Wolo’s |
inventory consists of finished goods acquired for resale and is valued at the weighted-average cost determined on a specific item basis. |
The Company periodically evaluates the value of items in inventory and provides write-downs to inventory based on its estimate of market |
conditions. The Company estimated an obsolescence allowance of $ 425,848 and $ 387,848 at December 31, 2022 and 2021, respectively. Property |
and Equipment Property |
and equipment is stated at historical cost less accumulated depreciation. Depreciation of furniture, vehicles and equipment is calculated |
using the straight-line method over the estimated useful lives as follows: Useful Life (Years) Building and Improvements 2 - 5 Machinery and Equipment 3 - 7 Trucks and Vehicles 3 - 5 F- 12 1847 |
HOLDINGS LLC NOTES |
TO THE CONSOLIDATED FINANCIAL STATEMENTS DECEMBER |
31, 2022 AND 2021 Goodwill Goodwill represents the excess of purchase price |
over the fair value of the net assets acquired. The Company evaluates goodwill for impairment annually, on December 31, or more frequently |
if an event occurs or circumstances that indicate the goodwill is not recoverable. When impairment indicators are identified, the Company |
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